Fact check: Social Security does contribute to federal deficit and national debt

Sudiksha Kochi, USA TODAY
·3 min read

The claim: Social Security has 'nothing to do' with deficit and national debt

A Jan. 12 Instagram post (direct link, archived link) from left-wing pages Occupy Democrats and Being Liberal shows a claim about Social Security.

"Dear Republican Party, If you take or cut OUR Social Security, I will bring a lawsuit against you for all the money taken from MY paychecks," reads the post. "Social Security has nothing to do with the deficit or the national debt. You created that fiction and we’re not falling for it."

The post generated over 10,000 likes in less than a month. Occupy Democrats shared the same claim on Facebook on Jan. 12, where it accumulated over 4,000 likes before it was corrected.

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Our rating: False

Economic experts said Social Security, which has run an annual deficit since 2010, uses bonds issued by the Treasury Department to pay out benefits. The government must borrow money from the public to repay those bonds, which contributes to the federal deficit and national debt.

Social Security contributes to deficit and national debt

Social Security and the rest of government are "far more intertwined" than this Facebook post claims, Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, told USA TODAY in an email.

The deficit is the annual gap between what the government spends and what it takes in through taxes and other revenues, Gleckman said. The national debt is the cumulative amount of all those deficits over time.

Social Security is a pay-as-you-go system, meaning that Social Security taxes are collected via the payroll tax on current workers and used to pay all current beneficiaries, according to the National Academy of Social Insurance. Leftover funds are then deposited into the Social Security trust fund.

From 1984 to 2009, Social Security ran a surplus, meaning it collected more in annual revenue than it paid out every year in benefits, according to Gleckman. That surplus was borrowed and spent by the rest of the government and, in exchange, Social Security got special Treasury bonds it kept in its reserves to redeem in the future.

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Since 2010, however, Social Security has been running an annual deficit, meaning it has been collecting less in revenue than it pays out in benefits, according to Gleckman.

As a result, Social Security redeemed the bonds held in the trust funds to pay out the full benefits, Andrew Biggs, a senior fellow at the American Enterprise Institute, told USA TODAY. When the federal government repays those bonds, it must borrow from the public to obtain the funds to do so.

“Thus, if Social Security runs a tax deficit of $1 this year, it redeems $1 of trust fund bonds, and the federal government borrows $1 from the public to repay those bonds,” Biggs said.

That in turn increases the unified budget deficit, which covers the entire federal government budget, and the national debt on a dollar-for-dollar basis, Biggs said.

USA TODAY reached out to Occupy Democrats and Being Liberal for comment. A version of this post on Occupy Democrats' Facebook page was corrected Jan. 18 to quote a PolitiFact fact check that noted Social Security shortfalls have required the government to borrow and add to the deficit since 2010.

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This article originally appeared on USA TODAY: Fact check: Social Security does contribute to federal deficit, debt