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The US Treasury Department announced that the debt has increased to 40 Trillion dollars. In the articles explaining the debt, I keep reading about how Social Security payments are adding to the debt. Can someone please explain to me how that is? My understanding is the payments are made from collections of Social Security taxes from current employees and employers, as well as taking money from the Social Security trust fund. So please explain how a self funded program adds to the deficit. I know that some of Medicare payments are made from the general fund.
The convoluted thinking claims that the treasury bonds previously purchased by the SS trust added to the federal debt. By law since 1939 excess revenue to the SS trust was required to purchase bonds. This, creates more debt not held by the public.
However, that is not actually adding to the debt. If those bonds hadn’t been issued to the trust, they would have been sold otherwise as the proceeds of those sales were used for general spending as are all treasury bond sales.
The need for that added federal revenue to cover deficit spending is the problem, not who buys the bonds.
Purchasing those bonds by the SS trust has stopped. They started to be redeemed in 2021, now presumably new bonds must be sold to send the cash to the SS trust to pay SS benefits.
SS adds to the debt like Japan and China do as they hold nearly $2 trillion is treasury bonds.
“Purchasing those bonds by the SS trust has stopped. They started to be redeemed in 2021, now presumably new bonds must be sold to send the cash to the SS trust to pay SS benefits.”
Maybe that is why there are people that claim the government stole the trust fund money, and maybe they are correct. I guess I forgot that the money was not really “saved” but by your explanation the government spent the money thus creating a further liability that they would have pay out. In other words more smoke and mirrors financing.
This creative accounting by our elected leaders is not limited to the Federal government. I live and pay taxes in New Jersey where the future unfunded liabilities for state worker pensions and retiree healthcare expenses are around $162 billion. That is over $42,000 per taxpayer. I guess I should be thankful I don’t live in Illinois, where it is even worse.
I sympathize. I could not do it any more and moved out of the poorly run state I was in some years ago. Just in time as it worked out…as it has since entered the fiscal proximity of Illinois and N.J.
I sat next to a person on a flight not long ago out of O’Hare who was moving from Illinois after over 50 years there and was on his last flight out. He was in a very jovial mood. He quipped that it might be easier for private sector employees/tax payers in poorly run states to just adopt a state worker family and pay part of their retirement etc.directly. He added “at least I might have gotten a Christmas card and invited to dinner once in awhile after I sent them a check each month.” 🙂
That’s because generous benefits were promised, but not paid for. Their “solution” was to make the NJ lottery an asset of the pension trust. At one point NJ paid the retirees Part B premium and allowed individuals to borrow from the pension trust at an interest rate below the assumed investment return of the trust.
The Social Security Trust Fund is in included in the approximate 40 trillion national debt as part of the debt from intragovernmental holdings. At 12/31/2025 a balance was about 2.5 trillion was due to the social security fund, which is shrinking fast, from the general fund. We even have pieces of paper to prove it. Per the last trustees report they estimate the trust fund will be fully depleted in late 2032. I hope it will last another six years.
I am unsure what you have been specifically reading where you write “I keep reading about how Social Security payments are adding to the debt”. My guess are articles are referring to the unfunded social security debt over the following 75 years that is not included the current “official” 40 trillion dollar debt.
The Social Security fund unfunded debt is basically a liability of how much the program would pay out over the next 75 years over the amount the program is projected to collect over the next 75 years with both measures using current rules and lots of assumptions. A big guess would likely be an understatement but the unfunded liability is currently in the official national debt number as a zero liability.
The balance as of the 1/1/2026 unfunded liability per the recently released trustees report was 29.3 trillion and that amount has been getting larger with each passing year. The US government balance sheet has massive items omitted, with the real liability balance being a mile long loaded freight train with very limited time to slow or stop before it crashes.
This is no way to run a railroad.
“… the unfunded liability is currently in the official national debt number as a zero liability.”
Ah, nothing like creative accounting!