Politics

Social Security does not contribute to the federal deficit  … WRONG

Listen to Bernie Sanders (and others) and you will hear his claim about Social Security is not affecting the federal deficit. He is either sadly misinformed or intentionally misleading the public. 

Social Security takes in money from payroll taxes and pays benefits. Before 2010 the taxes exceeded the benefits paid. The excess money was used to buy special treasury bonds. The federal government used the proceeds from those bonds for general government expenses and pays interest on those bonds to the Social Security Trust Fund. 

Today, Social Security uses incoming taxes plus interest on the bonds to pay benefits. It can no longer purchase more bonds because there is no excess revenue. 

By 2034 the Trust will have redeemed all its Treasury bonds in order to pay benefits so there will be no more interest paid to the trust. At that point the only revenue to pay benefits will be incoming payroll taxes. Those taxes will be sufficient to pay only 75% of earned benefits. 

Regardless of the technicalities of the federal budget process, as long as the Social Security Trust pays out more benefits than it receives in revenue, it affects the federal deficit. The interest payments and the money to redeem the Treasury bonds must come from somewhere and that somewhere increases the deficit. 

For a more in depth explanation go HERE

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