Does Social Security contribute to the Debt? To the Deficit? Supporters say NO. 'Reformers' and outright Opponents say YES Of Course. But I am here, with the help of official tables and definitions from CBO, OMB, SSA, and perhaps JCT, to give you the final, the definitive, the end debate for all time answers. Or maybe not. Because the real answers to those questions are: Yes, No, Both, It Depends, and Can You Define Your Terms. And all of those answers can either be in good faith or bad, and the tools are not responsible for their use. All this post is meant to do is to allow Kossacks to start building their own toolboxes, starting with some from the above table from
CBO's 2012 Budget and Economic Outlook.
Tool sharpening starts below the squiggle.
First thing to note: these are literally top line numbers. That is they are the first numbers you encounter in tabular form in the Summary section of CBO's Budget Outlook Meaning for reporters or readers who tend to substitute skimming for research they represent THE numbers for (in this case) deficits.
For example we have the following in bold: Deficits (-) or Surplus. Now this isn't the only use of 'deficit' by CBO, they rather confusingly have something called 'primary deficits', but 99 times out of a 100 when you find a citation to THE deficit, this is the one being referred to. For example a simple search on '2011 Federal deficit' pulled up this news story FY2011 Federal Deficit = $1,299,000,000,000 and I will assert that this is just standard MSM news page usuage (WSJ and WaPo Op/Ed being a different story). And clearly this $1.299 trillion is simply a minor update of the $1.296 trillion of the table above.
Further that $1.296 trillion represents the simple sum of a $1.363 trillion of 'on-budget' deficits and $67 billion 'off-budget' surpluses. Which footnote (a) tells us is the sum of Social Security Trust Fund surpluses and Post Office net cash flow. And as can be shown easily that $67 billion is almost identical to the 'net increase' in assets in the Trust Fund, obscured somewhat by the fact that CBO uses Fiscal Years and the following Table from the 2012 SS Report is for Calender Year. Table III.A3.—Operations of the Combined OASI and DI Trust Funds, Calendar Year 2011 And crucially this $69 billion in 'net increase in assets' (second line from bottom) is net of 'interest of $114 billion, there was in fact a net cash flow from the General Fund TO Social Security EVEN as Social Security ran a surplus. AND as that surplus flowed right to the topline calculation of THE surplus as used by CBO.
So did Social Security contribute to the reported $1.299 trillion deficit reported in that newspaper today? Yes. But its contribution, at least as CBO scores these things, was to REDUCE that deficit. Even as cash flow was NEGATIVE.
So when supporters tell you solemnly that 'Social Security doesn't contribute to the deficit' because its operations are legally 'off-budget' they are right as rain. Just using a more limited and specific sense of 'deficit' than that which ends up flowing into MSM headlines. Equally when opponents/reforms say 'Of course Social Security contributes to deficits and debt, its cash income started trailing total cost even BEFORE the payroll tax holiday' they are in a narrow sense right as well. Just using a different set of limited terms and definitions. But the key here is that neither party is using terms and numbers precisely as CBO does in its literal top line reporting. In that frame Social Security DOES contribute to the deficit EQUATION. By REDUCING the resultant.
Don't take my word for it, the tool is in the Table, you just need to pick it up and deploy it properly. And just wait until we move from 'Deficit' to 'Debt' in the next installment or two. Because the common sense understanding that 'Debt' is just the sum of 'Deficits' ends up not being true at all. Not at the granular level.