Have you not been paying attention to what the Fed has been doing? Pardon my language but shoving cash up my asshole earns more than 1% these days.
In 2022, before most of the rate hikes, the trust fund earned $66.4 billion. This year’s high, and hopefully very temporary, interest rates aside, it’ll usually be around 2.5-3%.
I’m not sure what you think loss leading means or why you’re using it here, but governments storing reserve money earmarked for a specific purpose in their own bonds isn’t unusual or a bad thing. Should they stuff it under a mattress earning 0%? Should they risk it in the markets? Unsecured domestic bonds? Foreign bonds?