As the largest and most important trust fund program in the US budget, Social Security provides an excellent case for exploring the distinctive strengths and weaknesses of trust fund financing as a precommitment strategy. The main argument of this chapter is that the Social Security Trust Fund has been a highly effective instrument for binding politicians to spending promises based on a reciprocal exchange of tax payments now in return for benefits later. The trust fund structure has strengthened the program's budgetary claims in two closely linked ways.

First, it has promoted Social Security's financial autonomy, insulating program spending from regular processes of fiscal control. In general, Social Security cutbacks have been off limits except in the context of internally defined “solvency” crises. Second, the trust fund mechanism has institutionalized the use of elaborate actuarial and long-range estimation techniques. The overall effect has been to reinforce the future orientation of Social Security policymaking, further isolating the program's taxing and spending from short-term partisan forces and economic conditions. In sum, the trust fund device has greatly enhanced Social Security's political strength, providing program builders with the institutional raw materials they needed to fashion a formidable coalition between current and future beneficiaries and to endow the program's spending commitments with moral potency.

But all governance structures have their limitations and the Social Security Trust Fund is no exception.