When talking about the relation between Social Security and 'deficit' 'debt' 'assets' 'unified budget' I often get the objections: "That is not what 'deficit/surplus' means!" "Under the law there IS NO 'Unified Deficit'" "Debts owed to the Government CANNOT be Assets to another branch of that Government".
Well, whatever. The fact is that SSA, CBO and OMB use certain terms for their own purposes in their own data tables, usages that may or may not be common across those agencies and ignoring that in favor of some essentially meta-discussion drawn from somebody's 'Principles of Accounting' textbook or even the US Code just STARTS us out chasing our terminological tails. What I suggest is reading the Reports ON their own terms IN their own terms and only after you grasp what they are trying to say to fit that back (if possible) to OTHER technical and legal usages. That said lets start with portions of Table VI.A3 from the 2012 Report, showing the combined Trust Funds from 1957 through 2004 (there was no DI Trust Fund in 1956 or before).
Discussion below. (Warning, may be too convoluted and inside baseball to be useful, and so jargon laden as to be unintelligible, feel free to ask 'WTF?' in comments)
The Table is divided into three main parts: Income, Cost, and Assets. The latter part is divided into three columns: Net Increase During Year, Amount at End of Year and Trust Fund Ratio. And almost immediately we come to a departure from 'common sense'. Because the figure for 'Net Increase During Year' is the SAME figure used for Social Security 'surplus' in CBO and OMB topline tables. Even though it doesn't match common sense ideas of what 'surplus' 'should' mean. And to make things worse for some, those OMB tables are labeled 'Unified Budget Surplus/Deficit'.
Now I know that there is under law no such thing as a 'unified budget' any more. On the other hand OMB knows that full well too, and if you want a full discussion of the history of 'unified budget' and what items were included in it when and which were removed and why they supply it in their 'Analytical Perspectives on the Budget'. Moreover they offer tables that separate track 'on budget' and 'off budget' surplus/deficits. But the fact remains that for historical apples to apples purposes the top line number to report THE current federal budget surplus is what was (but in a strict legal sense no longer is) the 'Unified Budget' surplus. Moreover the CBO in THEIR top line 'Surplus/Deficit' number use that same figure and in turn the MSM use it in their reporting. That is if you do a standard search on 'Federal Budget Deficit' this somewhat legally fictional number is what you will find almost everywhere. As such it is a 'term of art' and indeed in most budget reporting 'THE term of art'. And frankly legal purists just need to deal with it, at least when discussing Social Security and its relation to the Federal Budget IN ITS OWN TERMS.
Now taking it as given that 'Net Increase in Assets' represents Social Security's contribution to 'Off Budget Surplus' which is combined with 'On Budget Surplus/Deficit' to get the figure for THE Federal Budget Surplus (aka the former Unified Budget Surplus) what do we find? Well the beginning of that departure from common sense referenced above.
Because on examination 'Income' includes 'Interest' on Trust Fund 'Assets', it is NOT a measure of actual cash income drawn from the economy via taxes, and NOT a measure of cash flow, it is something else. What is to be explored.
Now Cost is more straightforward, currently 99% of it goes right to the economy in the form of Benefits while the other 1% is delivered in the form of Administration, in the case of SSA mostly in the form of salaries. So unlike Income it represents something commonsensical, real money going to the real economy.
But Income less Cost is something else, it doesn't immediately translate to a fixed economic factor, instead that depends on how interest is treated in that given year. For example in 1973 Social Security ran a surplus of $1.6 billion dollars which was combined (in that year legally) with the General Fund deficit to give a figure for the Unified Budget Deficit. But on inspection we can see that total Income from SS taxation in 1973 was $51.9 billion while total Cost was $53.1 billion. That is Income from Taxation less Cost represents something identifiably real, $1.2 billion in cash equivalents came from SOMEWHERE to cover the difference, even as the books showed an overall surplus due to $2.4 billion in Interest. And leaving that net Surplus (which in this light doesn't seem much like a surplus at all) to flow right to THE Budget Deficit/Surplus as reported by CBO, OMB and oh yes the MSM.
On the other hand in 1999 Income excluding Interest totaled $459.6 billion as opposed to $392.9 billion in total Cost. Meaning some $67 billion in actual tax dollars were extracted from the economy on net. And then were added to $11.6 billion in Interest CREDITED to the Trust Fund for a total Net Increase in Assets and hence SS Surplus of $88.6 billion every bit of which flowed right to THE Federal 'Unified Budget' Surplus for 1999. Even though in a legal sense there was NO Unified Budget to even BE in Surplus.
Which maybe would have scored points with a judge but meant bubkis to political and economics reporters at the time. Instead they took the definition of 'The Surplus', 'Social Security surplus' and BTW something not discussed expressly here 'Assets' ON SOCIAL SECURITY AND OMB's OWN TERMS.
Enough for the moment. But unless something intervenes I will be back in another post to explain why 'Assets' and 'Debt' have operational, useful meanings WITHIN the SSA and OMB and Treasury context that do some violence to both common sense and accounting principles.