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Originally Posted by biker1
Not exactly. SS taxes that had been collected, in excess of what was needed to pay benefits, were put in the general fund and spent to support Government operations. Treasury issued special T-Bills to the SSA for these excess funds. Essentially IOUs that the SSA can collect on in the future. This is the so-called Trust Fund and has a value of about $2T. These special T-Bills are now being cashed in to pay benefits as the current SS taxes are less than benefits paid. Essentially, the Government goes out and borrows money from world markets to pay off these special T-Bills as Government expenditures exceed Government revenue. This obviously continues to be a less than desirable situation. This will continue until about 2033 when the Trust Fund has been exhausted and SS taxes can only fund about 80% of benefits. This situation can and will most likely be fixed before 2033.
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Including FICA “contributions “ in the federal budget was done by President Nixon and Wilbur Mills, Chair of the House Ways and Means Committee back in 1972. This was called “dynamic finance”, and was a way to hide deficit spending until the benefits expended surpassed the revenue collected. All this could have been avoided with a minuscule FICA increase 25 years ago, but now the chickens have come home to roost.