[jack_h]

It does have an impact on intergovernmental debt. Here's a good explanation from GAO[1]:

> Intragovernmental debt holdings represent federal debt owed by Treasury to federal government accounts—primarily federal trust funds such as those established for Social Security and Medicare—that typically have an obligation to invest their excess annual receipts (including interest earnings) over disbursements in federal securities.

> Debt held by the public represents a claim on today’s taxpayers and absorbs resources from today’s economy, meaning that when an investor buys Treasury securities it is not investing that money elsewhere in the economy.

> Intragovernmental debt holdings reflect a claim on taxpayers and the economy in the future. Specifically, when federal government accounts redeem Treasury securities to obtain cash to fund expenditures, Treasury usually borrows from the public to finance these redemptions.

From memory I believe we're at ~100% publicly held debt to GDP and ~122% gross debt to GDP.

[1] https://www.gao.gov/assets/gao-25-107138.pdf

[watersb]

> have an obligation to invest their excess ... in federal securities.

The Social Security surplus is pretty much required to purchase US bonds and other guaranteed Federal securities.

But saying that "contributes to the Federal debt" is like saying your 401k contributes to corporate debt.

I am still not convinced that Social Security causes Federal debt the way that a trillion-dollar military budget does.

[TheOtherHobbes]

I don't understand why this is being discussed rationally. The motivation to remove social security isn't economic or rational, it's political and psychological.

A small group of people considers itself superior to the rest of the population. As a group it is convinced it deserves every break, benefit, privilege, and handout, while the second group is only worthy of intrusive oversight, abuse, exploitation, and punishment.

This isn't hyperbole. This is the political belief system that drives the rhetoric about the government spending and debt.

The proof is simple - government debt always increases when the first group is in power.

Always.

This wouldn't happen if it was really about the deficit.

[const_cast]

> The motivation to remove social security isn't economic or rational, it's political and psychological.

Yes this is it and this is all it ever was. The second the pen was put to paper and SS was made law it has been under attack. People have been proclaiming it'll go insolvent any day now for almost a century.

It's an ideological attack and we shouldn't even humor these people. The idea of essentially retirement insurance feels unfair to a ton of people and that's that.

[jack_h]

The Social Security surplus is used to fund general government operations and the Social Security Administration gets an IOU (Treasury security) in return. So it's still money the government didn't have before that it uses to fund its operations that it borrowed from a different self-funded program that had an excess, and it still needs to pay it back with interest. Usually the Treasury doesn't have enough tax dollars to pay it back, so they auction more bonds to the public and it gets added to the public debt at that point. However, if effective tax rates go up or spending is cut elsewhere then it can pay it back without adding to publicly held debt.

So you're right that it's not the same as publicly held debt. Rather intragovernmental debt is deferring the decision of how to pay for some governmental services to a later time, although usually it becomes publicly held debt. One way or another, the tax payer is on the hook for this spending which is part of the gross national debt, just like they're on the hook for publicly held debt.

[fkfyshroglk]

Well, perhaps you're right. I am not a finance guy and it seems to me you can probably pull debt out of any kind of relationship if you squint right. But it certainly is not to blame for our inability to balance the budget, which seems easiest to explain with nearly sixty straight years of cutting marginal tax rates while claiming to be fiscally conservative.

[jack_h]

> you can probably pull debt out of any kind of relationship if you squint right.

No, this is pretty explicit. To rephrase what the GAO said when the Social Security Administration takes in more than it sends out it invests the difference in special Treasury securities (that's the trust fund(s)). The money the Treasury gets is spent on general government operations (education, healthcare, etc). The treasure must pay this money back, with interest.

> But it certainly is not to blame for our inability to balance the budget

When the Treasury pays the principal and interest it needs to either have enough tax dollars (higher tax rates or spending cuts) or issue debt to the public. So yes, it does factor into a balanced budget. It still must be paid back and the taxpayer will foot the bill one way or another, now or in the future.

> which seems easiest to explain with nearly sixty straight years of cutting marginal tax rates while claiming to be fiscally conservative.

This is a gross oversimplification. If you think just one side is the issue you're not going to be able to fix the problem.

[fkfyshroglk]

> This is a gross oversimplification. If you think just one side is the issue you're not going to be able to fix the problem.

And what is the other side, pray tell?

Don't worry, I gave up on this country's ability to fix any problem a long time ago.

[jack_h]

Tax rates aren't everything as those affect the size of the economy. Since the end of WW2 the federal government has received ~17.5% of GDP in taxes[1] (+/- ~2.5%). You can decrease effective tax rates, end up with a larger economy, and have a higher absolute value of tax revenue than you did with higher tax rates. So it's more complicated than "lower tax rates => less tax receipts".

If we restrict our view to programs like Social Security or Medicaid we see that demographics are also straining the system. For instance I believe the number of people contributing to Social Security vs the number of people receiving benefits in the 70s was around 3.7 (payer/beneficiary), we're currently around 2.6 and in 10 years that will go down to 2.1. Put simply we're unhealthy, we're getting older, and we're not having enough kids to contribute to these programs that pay for all of these old, sick, childless people to retire and have healthcare.

From a philosophic point of view I would say the fact that about half of the electorate do not want higher taxes while the other half wants more government services should mean that these extra services are non-viable politically. What we've essentially done instead is "compromised" by not having higher taxes but still expanding government services which is contributing to our debt issues. We simply can't have it both ways, but that's exactly what the people voted for through their representatives.

> Don't worry, I gave up on this country's ability to fix any problem a long time ago.

While we are likely on opposite ends of the political spectrum, I can agree that I don't see us actually fixing this problem. I made a comment elsewhere in this thread discussing the fact that Congressional Republicans appear to be going for lower taxes and higher deficits right now while the Democrats are in disarray and not particularly focused on this problem. The unfortunate fact is that this problem is going to get worse and the solutions will get more painful over time. Congress as a whole has really dropped the ball here.

[1] https://fred.stlouisfed.org/series/FYFRGDA188S

[fkfyshroglk]

> From a philosophic point of view I would say the fact that about half of the electorate do not want higher taxes while the other half wants more government services

Are these not the same people? One half can convince themselves they don't get any payoff from their taxes; the other sees the payoff. Ultimately both expect services from their government they aren't getting, and are upset with services the government does render that seem inherently injust.

The difference is that those who most adamantly state they contribute the most while getting the least actually contribute the least while getting the most.

[s1artibartfast]

>While we are likely on opposite ends of the political spectrum, I can agree that I don't see us actually fixing this problem.

Eventually reality comes calling and problems resolve themselves. You just might not like the resolution.

If you fail to proactively address a cancerous growth, health problems compound but eventually disappear entirely.