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Congress can't actually divert revenue from SS. The way that cutting benefits affects the budget is that the SSA uses more of the payroll tax to buy more bonds,
by dvogel 15y ago
Congress can't actually divert revenue from SS. The way that cutting benefits affects the budget is that the SSA uses more of the payroll tax to buy more bonds, rather than paying the revenue out as benefits. The government still has to use non-SS revenue to pay off prior SSA-held bonds. Thus, once SSA collects less from the payroll tax than they need to pay out (which will happen soon, and may have already happened due to the Making Work Pay tax cut), cutting benefits will not reduce the budget deficit at all, because the SSA will need all of the revenue from the payroll tax and all of the revenue from its maturing bonds to pay out benefits. In order to use any payroll tax revenue (via SS bonds) for non-SS programs, they would have to make unrealistically large cuts in benefits. So, in short, that well will run dry soon enough, and you won't have to worry about it.