Nothing like some comments on the trust fund to get the blogging juices flowing. It is amazing how metaphysical these discussions on the trust fund get. I don't really see anything very complicated here. I am simply referring to the law as it stands.
Under the law, Social Security can only pay benefits out of the money that it has in its trust fund. Yes, that means it has a separate account from the rest of the budget. If the budget has an enormous surplus, but the trust fund is empty, then no benefits get paid, that's the law. On the other side, if the government has an enormous deficit, but the trust fund still holds bonds, then Social Security benefits still get paid, that's the law. I have not commented on whether I like the law or not, I am simply describing the law. (By the way, Medicare is currently being financed in part by the bonds held in its trust fund, and I have not heard a single politician make an issue of this.)
Under the law, there is absolutely nothing that would suggest the bonds held by the trust fund are fictional. They are legal obligations, just like the bonds held by banks and private individuals. As President Bush rightly pointed out last year, they are "sheets of paper." That is true of other bonds, stock certificates and most other claims to wealth in a modern economy. Maybe there are a lot of folks out there who carry around gold, but for my part, I don't know of any.
Could Congress change the law? Of course, Congress passed the law and it has the legal authority to change it. My guess is that any Congress that voted to default on the bonds held by the trust fund would be massacred at the polls, but that is just speculation. I will say that I do not know of a single member of Congress who has publicly called for defaulting on the debt.
In any case, if people are trying to understand Social Security's finances, they should understand what those finances are under the current law, not the law that some oped writer or Washington Post editor would like to exist.