Why is Social Security Under Attack from Obama, when it ADDS NOTHING to the deficit???

[Igel]

36. Because "deficit" isn't the only thing that matters.

Oh, incidentally--it does add to the deficit. We're currently taking money from the general fund to buy out the loss of revenue from the FICA tax deduction. Back to the point, however.


Cash flow matters. Who you owe matters.

Currently there's a mess of money owed by the US government to the branch of the US government called "Social Security." We pay interest on it, but it's all in house and the interest is mostly just accruing on the books and not being paid.

As soon as we start having to pay interest and the loan capital we have to start either using general tax revenue OR we have to issue public debt. (Yeah, the SS debt is considered public, but it's special public debt--all held by Treasury as opposed to the domestic US public or overseas agents. It's also special in that altering the terms of the special debt would have little effect on the other forms of US debt.)

Of course, this entails actually paying back the debt without cutting benefits. It's also possible to just tax people more and never pay it back.

As soon as the "trust fund" is drained and a trillion dollars or more added to the debt held in private hands, then the choice is again to cut benefits, raise taxes, or fund SS out of general revenues.