On the flip side, Social Security and Medicare have dedicated revenue streams which are meant to cover their costs. In the 1980s, a budget deal was arranged whe

On the flip side, Social Security and Medicare have dedicated revenue streams which are meant to cover their costs. In the 1980s, a budget deal was arranged where Social Security would move from being a pay as you go arrangement to actually collecting more money than necessary with the deal being that the Federal government would borrow money from that SS surplus to cover, among other things, Reagan's tax cuts. Because of the way the accounting is done, the surplus from SS payroll taxes is then converted into Treasury bonds. A similar situation exists with Medicare. Because of this, an argument could be (and has been made), that SS/Medicare are not really a part of the Federal government. The statement that defense is the largest discretionary part of the federal government is an indisputable fact.