social security

[Danzig]

http://factcheck.org/2011/02/democra...ritys-red-ink/


Summary
Some senior Democrats are claiming that Social Security does not contribute "one penny" to the federal deficit. That’s not true. The fact is, the federal government had to borrow $37 billion last year to finance Social Security, and will need to borrow more this year. The red ink is projected to total well over half a trillion dollars in the coming decade.
President Barack Obama was closer to the mark than some of his Democratic allies when he said that Social Security is "not the huge contributor to the deficit that [Medicare and Medicaid] are." That’s correct: Medicare and Medicaid consume more borrowed funds than Social Security, and their costs are growing more rapidly. But Obama’s own budget director, Jacob Lew, was misleading when he wrote recently that "Social Security benefits are entirely self-financing." That’s not true, except in a very narrow, legalistic sense, and doesn’t change the fact that Social Security is now a small but growing drain on the government’s finances.Payroll taxes exceeded benefit payments regularly until 2010. But the fact is that Social Security has now passed a tipping point, beyond which the Congressional Budget Office projects that it will permanently pay out more in benefits than it gathers from Social Security taxes. The imbalance is made even larger this year by a one-year "payroll tax holiday" that was enacted as part of last year’s compromise on extending the Bush tax cuts. The lost Social Security tax revenues are being made up with billions from general revenues that must all be borrowed. The combined effect is to add $130 billion to the deficit in the current fiscal year.
It’s important to note that benefit payments are not in immediate danger. Under current law, scheduled benefits can be paid until about 2037, according to the most recent projections. But keeping those benefits flowing is already requiring the use of funds borrowed from the public. So we judge the claim that Social Security is not currently contributing to the deficit to be false.



the last paragraph:




For more on the future effect of Social Security on the budget, see "Social Security and the Budget," a report co-authored by Steuerle for the Urban Institute last May. A figure on page 4 graphically illustrates that Social Security’s expenses are projected to outrun its income. The gap is projected to grow to close to 2 percent of the national gross domestic product and remain there for decades, as far in the future as 2080 and beyond.