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Thursday, Sep. 2, 2021

Is Social Security funded separately from other government spending?

Austin Tannenbaum, Gigafact

yes

While general tax revenue may be spent on any government expense, Social Security is funded by revenues from the dedicated payroll tax which must be spent on the program. Workers who pay into the program become eligible to collect benefits upon retirement. Revenue is allocated to those currently eligible for benefits rather than kept in individual accounts.

If more revenue is collected than disbursed, the difference is saved for future use. For the first time since 1981, Social Security will run a deficit in 2021. Assuming deficits continue, Social Security would be insolvent by 2034. At or before that point, benefits would have to be reduced or the program would have to be restructured.

Social Security funding is thus “off-budget” and not part of the Congressional budgeting process. Its finances are considered in ”unified” views of the budget that include all government activity.

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