Decide whether the statement makes sense. Explain your reasoning.Gabe said "For years there has been no money in the Social Security trust fund, just a bunch of IOUs". Kim said "That's impossible, if that were true, how come the government has been able to pay out Social Security benefits all these years?" Who is making more sense?

Question

What will be an ideal response?

Answer 1

Gabe is right. The government has been able to pay Social Security benefits these last years because currently it collects more in Social Security taxes than it pays out in Social Security benefits. It is supposed to invest the excess into the Social Security trust fund but the government has to date borrowed every penny that it ever deposited into the fund.