Q. Are the Social Security trust funds filled with real assets that can be used to pay benefits? Or are they nothing more than worthless IOUs? I know that the government borrows money from Social Security. What kind of interest is paid on those loans? I've heard it's only 1 or 2 percent. When is the government going to pay back the money it borrowed to pay for the Vietnam War?
	A. The government started borrowing money from Social Security in 1937. That has been a requirement of the law since FDR signed the first Social Security Act on August 14, 1935. Social Security holds U.S. Treasury securities representing those loans.
	The government pays Social Security the market rate of interest on U.S. Treasury securities. That's not as lucrative as some other investments might be. And it's true that Treasury securities are IOUs. But the U.S. Treasury's IOUs are backed by the full faith and credit of the United States, making them the safest investments in the world.
	The government pays Social Security the market rate of interest on U.S. government securities: At the end of every month, Treasury calculates the average interest rate on all U.S. Treasury securities sold to all investors during that month. Social Security earns that interest rate on that month's "new investments". Thus, Social Security's IOUs earn many different interest rates depending on when the loan was made. Currently, interest rates on individual IOUs range from about 5 percent to about 10 percent.
	Social Security cashed in some IOUs in 1957, 1958, 1959, 1960, 1961, 1962, 1963, 1965, 1975, 1976, 1977, 1978, 1979, 1980, 1981, 1982 and 1983. In all of those years, Social Security tax collections fell short of Social Security benefit payments. By the end of 1983, the government had paid back every cent--with interest--it had ever borrowed from Social Security from 1937 through 1983. That even includes the money borrowed during the Vietnam War era.
	In 1984, mostly because of a tax increase, Social Security began running surpluses, and the borrowing began again. Surpluses will continue until about 2017 when tax collections again fall short of benefit payments. From 2017 to 2026, Social Security will use the interest on the IOUs to help pay benefits. From 2026 to 2041, Social Security will cash in the IOUs and use that money to help pay benefits. By 2041, the government again will have repaid everything it ever borrowed from Social Security.