The New York Times published an editorial on Social Security Sunday essentially reaffirming its long-held support for the status quo, plus some tax increases. But it got one of its “facts” wrong when it asserted, “Social Security is not a cause of today’s deficits.”
Social Security absolutely has added to current deficits.
First a distinction between federal debt and deficits. Federal debt is the total amount of money owed by the federal government—at least, the amount we keep on the books. That figure is $16.7 trillion and rising. [updated 9/2018: now $21.5 trillion and rising]
Part of that total debt, about $2.6 trillion, represents the money the federal government has borrowed from Social Security’s Old Age and Survivors Insurance Trust Fund (which excludes disability).
But the federal deficit is something different, and the Times is referring to the deficit.
The federal deficit is the difference between how much the federal government takes in and spends in a given fiscal year. That figure was well over a trillion dollars annually for President Obama’s first four years but is predicted to decline in future years in part because the economy is doing better, albeit still well below normal, and because of the sequester cuts.
When Social Security spends more than it takes in as it has in recent years, it must draw from the trust fund to cover the gap. But because the federal government has borrowed the money in the trust fund—which is why it shows up as part of the federal debt—it must draw from general revenues to pay the trust fund. Since the government is running a deficit, any drawdown of money from general revenues adds to the deficit.
Moreover, in 2011 and 2012, Congress passed a temporary payroll tax reduction. Social Security’s trustees say that cost the federal government $222 billion. According to the trustees, “The legislation establishing the payroll tax reduction also provided for transfers from the General Fund to the trust funds in order to ‘replicate to the extent possible’ payments that would have occurred if the payroll tax reduction had not been enacted.”
That’s $222 billion that was added to the federal deficit in 2011 and 2012.
The Times is free to defend the Social Security status quo, plus tax increases, if it wants. But it should be truthful, or at least accurate, about how it affects the federal deficit.
June 12, 2013