The Social Security Trust Fund doesn't and never will add to the federal debt.

[Kaleva]

Every dollar of special issue bonds the SS Board of Trustees cash in to help meet obligations reduces the Federal debt by 1 dollar. This then allows the U.S. Treasury to borrow another dollar without increasing the debt.

There is some quibble about what effect the interest paid to the Social Security Trust Fund has on the total debt though. This could easily be resolved though by making the special issue bonds non-interest bearing.

[jtrockville]

1. Right on! Preach it Kaleva.

[bvar22]

2. The "Payroll Tax Holiday" NOW directly connects Social Security to the deficit.

"To prevent Social Security from losing tax revenue, Congress mandated that revenues be transferred from the general fund to the Social Security trust funds to make up for the tax reduction."

http://taxes.about.com/od/payroll/a/Reduced-Social-Security-Withholding-For-2011.htm

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1538388

Thank You, Democratic Party Leadership.

[Kaleva]

3. The interest paid to the Fund covers the shortfall

The shortfall is about 45 billion this year but the govt. paid the fund $116 billion in interest payment. Even without the interest payment, the shortfall in revenue could have been made up by cashing in the special bonds which wouldn't have increased the federal debt.

[bvar22]

6. Are you saying that this statement is NOT true or applicable?

"Congress mandated that revenues be transferred from the general fund to the Social Security trust funds to make up for the tax reduction." (caused by the "temporary" Payroll Tax Holiday)

I'm not an economist, but that seems pretty straight forward.
Congress has mandated that Cash from the General Fund be transferred directly to Social Security to cover for the loss in revenue caused by the"Payroll Tax Holiday".
What about this am I mis-understanding?

Interest Payments would appear to be an entirely different issue.

[Kaleva]

10. From what I've read....

the interest alone paid to the Trust Fund covered the shortfall this year. It was enough to even make the SS revenue have a surplus of about 72 billion.

[bvar22]

13. Once again,

"Congress mandated that revenues be transferred from the general fund to the Social Security trust funds to make up for the tax reduction." (caused by the "temporary" Payroll Tax Holiday)

That statement says nothing about "making up for a shortfall".

It says funds WILL be transferred "to make up for the tax reduction." (due to the "temporary" Payroll Tax Holiday)

[Kaleva]

14. And once again, from whatI've read....

the shortfall caused by Payroll Tax Holiday was about 45 billion for this year but the interest paid to the Trust Fund more then covered that (Interest paid this year was $116 billion).

[bvar22]

15. Well read THIS again, or post a link that supports YOUR contention,

because the link I posted clearly disagrees with you.

"To prevent Social Security from losing tax revenue, Congress mandated that revenues be transferred from the general fund to the Social Security trust funds to make up for the tax reduction. This is provided for in section 601 of the Tax Relief Act, which reads in part, "There are hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) amounts equal to the reduction in revenues to the Treasury by reason of the application of subsection (a). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund had such amendments not been enacted."

http://taxes.about.com/od/payroll/a/Reduced-Social-Security-Withholding-For-2011.htm

I do not believe there are two ways to interpret that.
It is VERY clear, and very precise.

The reduction in revenue due to the Payroll Tax Holiday WILL be replaced with CASH from the General Fund.
There is absolutely nothing about shortfalls or interest on loans from the SS Trust Fund.

[ProgressiveEconomist]

4. 'Every $ ... Trustees cash in ... reduces the ... debt by $1' Check your "facts"

Check your "facts"

On the contrary, every dollar of non-tradeable bonds Trustees present to the Treasury for reimbursement has to be raised by budget authorization or in a Treasury auction of NEW tradeable bonds to China and the rest of our creditors.

Social Security does not add to the deficit in a legal sense, because since 1983 working Americans have paid $2.7 trillion into the Trust Fund. But Reagan and the Bushes squandered all that cash. Now Congress and the Treaury are on the hook for all those trillions. That's why Republicans want to raise retirement ages, trim COLAs, etc., and why Democrats want to "uncap" FICA payroll taxes for those with six- to eleven-figure incomes.

See http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=1570607&mesg_id=1572882 for a fuller explanation and link to ssa.gov

[Kaleva]

5. We have a 2.6 trillion dollar debt to the SS Trust Fund.

Cashing in a certain amount of non-tradeable bonds reduces the debt by that amount which allows the Treasury to borrow that same amount.

[ProgressiveEconomist]

7. Your first sentence is true. The rest of your post just ain't so.

[Kaleva]

8. If we pay off the debt owed to the Trust Fund by borrowing the same amount from China

Our total dept doesn't change.

[ProgressiveEconomist]

12. True, but the publicly-held debt goes UP by $2.7 trillion., and credit

rating agencies and global creditors go wild!

[lumberjack_jeff]

9. You're talking past each other.

When the SS sells a bond to the treasury, the debt goes down, right?

The government runs a deficit, so it doesn't have the cash to make the transaction, so it borrows the amount from someone else, right?

Explain how that transaction raises the debt. It may shift the debt from SS recipients to other lenders, but it doesn't increase overall indebtedness.

[ProgressiveEconomist]

11. Incisive post! There are two kinds of debt, "tradeable" and "non-tradeable"

Global creditors and credit-rating agencies (and myself) generally pay attention only to "tradeable, publicly-held debt".

Non-tradeable, not-publicly-held debt is internal accounting to which few people pay any attention.

The "debt ceiling" that han everyone in a tizzy today applies to the tradeable, publicly-held debt.

When non-tradeable debt declines by a dollar, tradeable debt goes up by a dollar, and a dollar of debt-ceiling is used up, other possible uses of publicly-held debt are sueezed out by a dollar. The SS trustees are competing with the forty cents out of every budget expenditure that has to be borrowed. That's what concerns me, and what irked me about the OP.