KØHB wrote:
"N2EY" wrote


The 800 pound budget gorillas are defense spending, Medicare and
Social Security.

Social Security is pretty much self-funded, and in fact has been tapped from
time to time for deficits in the general fund.

Social Security has only been separately accounted for since 1986. Before
that payroll tax revenue and SS expenditures went to and from the general
fund and so were indistiguishable from other taxes and expenditures, which
is where the habit of lumping it all together came from. SS has been
generating a surplus since Reagan raised the payroll tax (in 1983 or so)
and separated out the accounting, and I think now SS owns over $3 trillion
in US government debt.

This is with baby boomers still working, however. Since the separately
accounted SS is essentially an insurance policy its financial health needs
to be determined from actuarial tables, rather than from a simple
current balance, since most SS liabilities are still in the future. The
fact that SS was actuarily insolvent in the early 80's was why Reagan
(back in the days when there was some adult attention paid to the country's
fiscal state) cranked up the payroll tax to ensure that current surpluses
sufficient to cover future liabilities were generated.

The only reason I point this out is that the current Congress generated
a report a couple of years ago showing that SS would be unable to meet
its obligations by, I think, 2014. The study reached this result by
assuming the federal debt owed to SS would never be repaid, which suggests
that the current government is again treating the payroll tax and SS
payments as contributions to and expenditures from the general fund.

Dennis Ferguson