'Social Security has never contributed one cent to the deficit. Not one cent.
U.S. Sen. Jeff Merkley, D-Ore., running for re-election against Republican challenger Monica Wehby, addressed Social Security during a meeting with about a dozen Bend-area senior citizens in August. The claim: Just in case PolitiFact Oregon had forgotten about that roundtable, Wehby's campaign seized on the opportunity to remind us by sending along a video clip in which Merkley defended Social Security's fiscal soundness. 'Social Security has never contributed one cent to the deficit,' he said. 'Not one cent.' We decided to check. The analysis: Social Security constitutes one of the federal government's most important functions. The program pays out about $60 billion in benefits each month to about 60 million recipients. About two-thirds of those are retirees. The rest are disabled workers, survivors or the spouses and children of retired or disabled workers. The program is financed mainly by payroll taxes paid by covered workers and their employers. Any surplus must be used to buy nonmarketable U.S. government bonds. The issue has jumped to the front burner because, after years of rolling up surpluses, Social Security in 2010 began paying out more in benefits than it was collecting. Current projections show the gap continuing to widen as aging baby boomers retire, then running dry by 2033. We contacted Merkley's office and asked how a program that's leaking money avoids adding to the deficit. Campaign spokeswoman Lindsey O'Brien, in an email, said Merkley was talking about Social Security's status as an 'off-budget' program -- a federal budget category encompassing programs that aren't included in the annual congressional budget process. She passed along articles and columns defending her boss's point -- that Social Security is legally prohibited from contributing to the deficit. This from the Center for Economic and Policy Research: 'Under the law, Social Security cannot possibly contribute to the on-budget deficit. It can only spend money that has been collected from the designated payroll tax or from the investment of past surpluses.' And this from Los Angeles Times columnist Michael Hiltzik: 'By law, it can't contribute to the federal deficit, because Social Security isn't allowed to spend more than it takes in.' We called Paul Norr, a California-based financial expert who has written extensively about Social Security. Legally, the program is totally self-contained, Norr said. 'Its finances NEVER intermingle with the overall federal allocations of funding,' he wrote in a follow-up email. 'SS either has or doesn't have enough funds.' Other PolitiFact checks around the country, however, have arrived at a different conclusion on what happens when the program bleeds red ink. 'When Social Security runs a deficit,' according to PolitiFact New Hampshire, 'the program draws on interest from the Social Security bonds, forcing government officials, already operating at a deficit, to borrow more money from other sources to make up the difference.' PolitiFact Wisconsin weighed in on the topic last year: 'Since 2010, Social Security has been paying more in benefits than it has collected in payroll taxes. To meet its payments, Social Security began redeeming the bonds, plus interest, from the federal government. ... Because the government had to borrow money in order to pay the interest on Social Security, that contributes to the deficit.' The nonpartisan Congressional Research Service, in a 2013 'Social Security Primer,' said this: 'Because the federal securities held by the trust funds are redeemed with general revenues, this results in increased spending for Social Security from the general fund.' The ruling: Merkley told a gathering of seniors that 'Social Security has never contributed one cent to the deficit.' Until 2010, that was true. However, the program has chalked up increasingly large deficits each year since, requiring money to be taken from its bonds to make up the difference. The senator argues, reasonably, both that Social Security is by law a closed system, and that its trust fund is sufficient for now to cover the current gap. It's also true, however, that these gaps do affect other parts of the federal government because they require borrowing elsewhere to make up the difference. We rate Merkley's claim Half True. Thoughts on the ruling? Click on over to OregonLive/politics.com to join the discussion.
The senator argues, reasonably, both that Social Security is by law a closed system, and that its trust fund is sufficient for now to cover the current gap. It's also true, however, that these gaps do affect other parts of the federal government because they require borrowing elsewhere to make up the difference. We rate Merkley's claim Half True. Thoughts on the ruling? Click on over to OregonLive/politics.com to join the discussion.