Everyone knows what the Social Security program is and the basic gist of how it functions: it’s a federal retirement benefit program we all pay into via the payroll tax during our working lives, and once we retire, we receive a monthly benefit payment for life–a benefit funded by the money we spent years contributing to the program.
But this is only the most basic explanation of how the program works. And it doesn’t explain how we’ve arrived at our current funding shortfall. How could a trust fund we’ve been paying into like a savings account not have enough money to pay scheduled benefits one day? How could we be talking about Social Security insolvency at the same time we’re talking about a $2.4 trillion surplus?
Things only get more complicated from there. Some would say Social Security is largely responsible for our federal debt, and others counter with “Social Security has nothing to do with our debt–it’s legally impossible.”
“Social Security is in trouble because of Johnson.”
“No, it was Reagan.”
“It was Clinton.” “It was Bush.” “It was Obama.”
“The Republicans want to gut Social Security!” “The Democrats spent every dime of our money!”
With so much conflicting information out there, we can’t blame anyone for feeling confused about the status of Social Security and its financing.
The truth is despite being a wonderful program that millions of retirees depend on, the Social Security program of today doesn’t quite look the way it did when it was first envisioned and enacted. Decades of every Congress, every President, and every political party’s spending and creative accounting has turned what the public views as a trust into source of federal revenue and debt.
Add to that some very serious demographic pressure–the largest group of Americans drawing benefits to date–and we have our current Trust Fund shortfall.
Here is a very informative series that goes into detail about the way Social Security financing works. It touches on just about every aspect of the Social Security funding dilemma, exactly how the government uses payroll taxes, and how Social Security interacts with our budget and overall debt.