Social Security has nothing to do with the federal deficit.
Hank Johnson on Tuesday, December 18th, 2012 in a twitter post
Congressman's claim mostly misses the mark
Editor's note: Some readers noted that employers, too, make contributions into Social Security. The article has been updated to reflect that point.
Some Democrats in Washington have staked out a position that important programs such as Social Security should not be changed as part of any spending reductions.
U.S. Rep. Hank Johnson, a Democrat from DeKalb County, made that point in a Twitter post. The congressman’s rationale included a claim we thought was worthwhile to fact-check.
Johnson wrote on Twitter: "#socialsecurity has nothing to do with the deficit -- why are we even talking about it?"
Social Security is one of the most important functions of the federal government. Social Security and Medicare account for about one-third of federal spending. In this age of trillion-dollar deficits, it would seem that Social Security is a factor in the nation’s fiscal challenges. Or is it?
Uncle Sam pays about $60 billion in Social Security benefits each month to about 60 million recipients, mostly retirees who paid into the system when they were working. It’s widely believed the number of recipients will increase in the future as Americans live longer. Lawmakers are concerned that the federal government will have less money to pay recipients in the coming years.
Eighty percent of the money for Social Security comes from employees, their employers and the self-employed, Johnson’s office told us. The federal government takes a percentage of the pay of most workers for Social Security. It had been 4.2 percent of the paycheck of most workers, but as you may have noticed by now, it is back to 6.2 percent after lawmakers let a cut in the payroll tax expire. Americans who make more than $106,800 don’t have to pay as much of their income, percentagewise, into the system.
The second source is investment income from Social Security’s reserves, which are invested in interest-bearing U.S. Treasury bonds; raising about 15 percent of total revenue, said Johnson’s spokesman, Andy Phelan. Social Security gets about 5 percent of its revenue from the taxes that beneficiaries pay on their Social Security benefits, Phelan added.
Our colleagues at PolitiFact New Hampshire recently looked at a claim that Social Security has not contributed to the debt and deficits and rated it Mostly False. They said that from 1984 to 2009, Social Security collected more money than it paid in benefits. Those surplus dollars, they reported, add to the Social Security trust funds, which currently hold about $2.7 trillion in assets.
The surplus funds are often invested in U.S. Treasury bonds.
Social Security, though, has been running deficits in recent years. The deficit was about $49 billion in 2010 and $45 billion in 2011, according to a 2012 Social Security trustees report. The average deficit will be about $66 billion between 2012 and 2018 as beneficiaries continue to grow at a faster rate than the number of covered workers, the report said. The cut in the payroll tax, by the way, cost the government about $100 billion in 2011 and likely the same amount in 2012, Social Security officials say.
So what happens when there is a gap in what Social Security collects and pays?
"When Social Security runs a deficit, the program draws on interest from the Social Security bonds, forcing government officials, already operating at a deficit, to borrow more money from other sources to make up the difference," PolitiFact New Hampshire wrote.
Boston University economics professor Laurence Kotnikoff told PolitiFact New Hampshire that Social Security is a part of the nation’s debt and deficit challenges.
"Nobody can claim Social Security isn’t part of the overall problem," he said. "It’s all labeling games. … It absolutely contributes to the overall fiscal situation. It’s in terrible shape."
The Washington Post’s Fact Checker has also looked into the impact of Social Security on the federal deficit. It noted that President Barack Obama had been more precise than others when talking about the issue, saying "Social Security is not the primary driver of our long-term deficits and debt."
The Post, too, reported that Social Security was providing more money than it was collecting in benefits in recent years.
To sum up, Johnson’s Twitter page said Social Security has nothing to do with the federal deficit. Until 2010, that was true. But the program has run a deficit each year since then and is taking money from its bonds to cover the gap. Federal officials are also worried about the long-term impact of future deficits on the program.
Johnson has a reasonable argument since Social Security is taking money from its bond interest to pay to cover the current gap. But these gaps do have an impact on other parts of the federal budget, and the projections are that the problem is going to get worse. We rate this claim Mostly False.