Why I bring up the trust fund is to repeat that there is no crisis in Social Security’s future. Let's note that Social Security is in a better fiscal position than, let's say, defense, which has no dedicated tax. Likewise, if Social Security is just part of the federal budget, with no budget or trust fund of its own, then, well, it’s just part of the federal budget: there can’t be a Social Security crisis. All you can have is a general budget crisis. Rising Social Security benefit payments might be one reason for that crisis, but it’s hard to make the case that it will be central. That is completely undercut because Social Security does have a trust fund.
The Social Security system won’t be in trouble: it will, in fact, still have a growing trust fund, because of the interest that the trust earns on its accumulated surplus. The only way Social Security gets in trouble is if Congress votes not to honor U.S. government bonds held by Social Security. That isn't going to happen.
Now it’s true that rising benefit costs will be a drag on the federal budget. So will rising Medicare costs. So will the ongoing drain from tax cuts. So will whatever wars we get into. I can’t find a narrative by which Social Security payments, as opposed to other things, become a crucial budgetary problem.
What we really have is a looming crisis in the General Fund. Social Security, with its own dedicated tax, has been run responsibly; the rest of the government has not. So why are we talking about Social Security defaulting?
