Social Security And The Deficit

“Social Security is prohibited from spending any money beyond what it has in its trust fund. This means that it cannot lawfully contribute to the federal budget deficit, since every penny that it pays out must have come from taxes raised through the program or the interest garnered from the bonds held by the trust fund.

Social Security does not contribute to the budget deficit. That is the law. "

~Dean Baker

Our Response

The logic is flawed.  By this logic, there are no illegal immigrants because there is a law that immigrants cannot come to America without valid paperwork.

This criticism is rooted in the idea that Social Security is insulated from the world; and the world is insulated from Social Security.  It is the Harry Potter School of Economics where Ceterus Peribus holds the world in suspended animation.   We see that income taxes and payroll taxes are highly correlated.  We blog at length about it.   And we agree to disagree.