In FY2011, according to the CBO, the Social Security program ran a $46 billion deficit, meaning that the benefits paid out through the program exceeded the taxes (most payroll) paid into the program by that amount. That $46 billion was added to the national debt because the Social Security trust fund is nothing but Treasury bonds.
Every time Social Security dips into its trust fund the US Treasury must make good on those bonds by borrowing from other sources and adding to the debt.
That $46 billion was on top of the $121 billion in Social Security deficits caused by President Obama’s payroll tax cut. That money was also made up by additional borrowing by the US Treasury.
Today, President Obama demanded that we continue a payroll tax cut which reduces the revenues paid into Social Security:
The President actually had the temerity to chide Republicans for opposing this tax cut. While it’s pretty clear that Republicans will, in fact, end up backing some extension of this payroll tax cut, we should all pause for a moment and appreciate just how crazy this policy is.
We’re robbing money from a massive entitlement program that’s already broke to pay for temporary tax relief that has almost no stimulus impact on the economy.
We would be better off doing nothing.