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Comment by fkfyshroglk | Hacker News Reader

Social security is funded with a social security tax. 6% of your paycheck is paid by you, 6% by your employer. (Or 12% by you if you are self-employed.)That by law can only go to fund social security and nothing else. Similarly, the fund is by statute guaranteed to only fund social security payments. It is completely separate from the rest of the federal budget.

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> That by law can only go to fund social security and nothing else.

Eh, that's partly true. The true statement is that social security tax revenue must eventually go to fund social security.

Before it's needed (i.e. while tax revenue exceeds benefits), it has been used to buy US treasuries -- the funds used to do so then appeared for Congress' general use.

You can see the US treasures the social security trust fund is currently holding here: https://www.ssa.gov/OACT/ProgData/investheld.html

The treasuries are effectively zero-risk assets to the trust fund and they also pay interest. Just having the fund sit the on cash would not be efficient.

The money goes to the trust fund, the trust fund buys treasuries and meets it's outlays using the maturing treasuries.

Creating a debt obligation with yourself isn't typically the definition of zero risk. ;)

Or to put it another way, buying special issue treasuries isn't functionally different than Congress directly spending excess money in the trust fund and guaranteeing to pay more back later.

Just with additional steps and a thin veneer of impartiality and financial standards.

> Creating a debt obligation with yourself isn't typically the definition of zero risk. ;)

Is there any other way to run a currency? Serious question.

Just posting this to see if people will also flag this random ish

Ok, let's chalk the "self-funded" part up to semantics.

> It has literally no impact on the deficit or our ability to pay off debt. By statute.

This however is wrong.

As a simple proof: let's just up social security payments by 3000x... social security is still "self-funded" and "separate" but that would be an untenable debt and the US would immediately default on that obligation. The amount and structure of social security debt matters to the US' ability to pay.

Social security is a promise to pay an amount of money in the future and it is backed by the "full faith and credit" of the US government. The bigger it is, the bigger the debt, the hard it is to pay off. It's a big impact.

Just because it's specifically funded and tied to a precise specific tax does not make it immune from debt considerations.

It says here [0] that the Social Security Trust currently holds about $2.6 trillion is US Federal securities.

https://www.ssa.gov/cgi-bin/investheld.cgi

Cash money from payroll tax is sitting there collecting interest and being drawn down by Social Security disbursements.

So we pay taxes, that revenue holds a gun to Congress and forces them to buy another aircraft carrier... That's semantics for you.

Sorry. The aircraft carrier thing is bitter sarcasm on my part. But I'm put off by dismissing the funded nature of Social Security as the root cause of the Federal debt.

The root cause is deficit spending.

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