On Feb. 20th, 2011, Sen. Richard Durbin (D-IL) made this claim on NBC's Meet the Press:

"Social Security does not add one penny to the deficit."

After carefully reviewing the factual evidence and arguments on both sides of this controversial issue, we find Sen. Durbin's claim "half true."

Other senior Democrats, such as Senators Chuck Schumer and Harry Reid, recently made the same statement, using similar black-and-white language to defend Social Security. As we have often found on Truthsquad, reality is usually more nuanced than that -- and comes in many shades of gray.

The controversy over this heated issue has polarized Americans across party lines, with Democrats claiming that Social Security has no impact on the deficit, and Republicans claiming the opposite. As we researched this claim, many of the articles we read on this topic tended to agree with one side or the other, and only a few non-partisan sources presented a neutral perspective on this politically charged issue.

Despite the tension between these opposing viewpoints, most observers seem to agree on these facts:
 • Social Security is required by law to be self-financing
 • Payroll taxes exceeded benefit payments regularly until 2010
 • This generated a surplus of $2.5 trillion in the Social Security Trust Funds
 • There is now a net shortfall which is expected to deplete the surplus by 2037
 • Treasury borrowed from the surplus in the Trust Funds to pay for other programs
 • The government is now having to borrow money to pay its Social Security obligations

More »

On Feb. 20th, 2011, Sen. Richard Durbin (D-IL) made this claim on NBC's Meet the Press:

"Social Security does not add one penny to the deficit."

After carefully reviewing the factual evidence and arguments on both sides of this controversial issue, we find Sen. Durbin's claim "half true."

Other senior Democrats, such as Senators Chuck Schumer and Harry Reid, recently made the same statement, using similar black-and-white language to defend Social Security. As we have often found on Truthsquad, reality is usually more nuanced than that -- and comes in many shades of gray.

The controversy over this heated issue has polarized Americans across party lines, with Democrats claiming that Social Security has no impact on the deficit, and Republicans claiming the opposite. As we researched this claim, many of the articles we read on this topic tended to agree with one side or the other, and only a few non-partisan sources presented a neutral perspective on this politically charged issue.

Despite the tension between these opposing viewpoints, most observers seem to agree on these facts:
 • Social Security is required by law to be self-financing
 • Payroll taxes exceeded benefit payments regularly until 2010
 • This generated a surplus of $2.5 trillion in the Social Security Trust Funds
 • There is now a net shortfall which is expected to deplete the surplus by 2037
 • Treasury borrowed from the surplus in the Trust Funds to pay for other programs
 • The government is now having to borrow money to pay its Social Security obligations

Given this common ground, the main point of contention seems to be over who is to blame for this additional borrowing. Is the Social Security program at fault? Or is the federal government to blame for using the surplus to pay for other programs? Based on the evidence we found so far, we conclude that the government is primarily responsible for the additional borrowing -- not the Social Security program, as detailed below.

Unfortunately, this does not change the fact that money borrowed from the public is now being used to pay Social Security benefits. It's on that basis that we find Senator Durbin's claim partly inaccurate, because, from an economic perspective, Social Security payments are now contributing to the federal deficit.

Durbin's claim was first brought to our attention by FactCheck.org director Brooks Jackson, in his recent article entitled "Democrats Deny Social Security's Red Ink." (Disclosure: Brooks Jackson is a NewsTrust advisor.) The article states that in 2010, Social Security reached a "tipping point," beyond which it is expected to permanently pay out more than it takes in each year, as projected by the non-partisan Congressional Budget Office (CBO). According to FactCheck.org, "the federal government had to borrow $37 billion last year to finance Social Security, and will need to borrow more this year. The red ink is projected to total well over half a trillion dollars in the coming decade."

This FactCheck.org article was criticized by some liberal publications, such as the Daily Kos. Their argument can be summarized by Dean Baker at the Center for Economic and Policy Research, who points out that the Social Security program is designed by law to be entirely self-financing, and is "prohibited from spending any money beyond what it has in its trust fund."

The payroll tax, which funds Social Security, had accrued a surplus of $2.5 trillion up until 2010. White House budget director Jacob Lew explains that the surplus from the Social Security Trust Fund is converted into Treasury bonds, which Congress can then borrow against to pay for other spending. By law, Congress must pay back this money with interest. Since payroll tax revenues fell short after the "tipping point" of 2010, the Trust Fund must now recall these debts, plus interest, in order to pay for Social Security benefits until 2037.

Baker acknowledges that the government needs someone to buy up the bonds from Social Security Trust Funds, but he argues that "this is just a redistribution of the debt."

Many Truthsquad participants echoed this interpretation in their notes, such as NewsTrust member Milt Shook:

"The Social Security Trust Fund has been running huge surpluses for more than 25 years. It was designed to withstand the bubble caused by Baby Boomer retirements, which means the surplus has been allowed to build for many decades, to make up for the inevitable deficits caused by these retirements. The federal government has borrowed against the trust fund often over the years, to make the general fund deficit seem smaller."

This difference between legal and economic interpretations of this issue seems to be a major source of disagreement. For example, the USA Today editorial board favors a pragmatic view of the economic impact of Social Security, rather than a legal perspective. USA Today considers the $2.5 trillion Social Security surplus to be, "at least in cash terms, a fiction," because it was immediately converted into bonds and lent to pay for other government programs. From the legal standpoint supported by Baker, Lew or Durbin, these funds are still rightful assets of the Social Security Trust Fund, but, practically speaking, the Congress must borrow new money to repay these costs, regardless.

NewsTrust member Roland Hirsch articulated this point of view in his answer:

"Social Security fund 'surpluses' have been used by the government for general purposes for decades. As more is now paid out than taken in by Social Security the government deficit will increase to pay these growing Social Security deficits."

Furthermore, for the year 2011, Congress passed a one-year, two percent reduction in payroll tax as part of their tax relief package. This will result in a reduction of Social Security Trust Fund income by $85 billion in FY2011 and $29 billion in FY2012 ($124 billion in total), according to the Congressional Budget Office. This revenue will be credited from the general budget in order to cover the obligatory Social Security payments for this one-year period. This shortfall is not part of the design of the Social Security program; it's only through the special 2010 tax relief act that money from the general fund has to be used this way. Still, technically, Social Security costs will require $124 billion from the federal budget to cover this expense.

Durbin's statement that "Social Security does not add one penny to the deficit" oversimplifies a complex situation. It does not account for the economic interpretation of Social Security's actual costs on a cash basis, and it dismisses the significant impact of the "payroll tax holiday." For these reasons, we find it half true.

It is worth nothing that President Obama made a more accurate statement than his Democratic colleagues in his Feb. 15 news conference, when he stated that "Social Security is not the huge contributor to the deficit that [Medicare and Medicaid] are." This statement implies that the borrowing to cover Social Security expenses does impact the overall budget, but also points out that these costs are minor compared to Medicare and Medicaid. We find the President's claim to be true on both counts.

We asked FactCheck.org director Brooks Jackson for his thoughts about responses to his article, which sparked this investigation and controversy. Here are his comments:

"As we said in our article, the Social Security trust funds are not running a deficit and won't until about 2037, at which point the trustees predict tax revenues will be sufficient to pay only 78 percent of promised benefits. But the positive and growing trust fund balances are not relevant to a discussion of "the" deficit, which can only refer to the government's overall deficit. The simple fact is, money borrowed from the public is now being used to pay benefits -- $130 billion of it in the current fiscal year according to CBO projections. Partisan allegiances and legal technicalities should not blind anyone to that unfortunate fact."

NewsTrust Member Bob Herrschaft expressed the difficulties articulately in this comment:

"I think we're getting into an argument over semantics... Social Security cannot be separated from the "larger box" of the health of the U.S. Treasury. The one-year moratorium on worker contributions emphasized this relationship. The aging population and shrinking workforce paying into the system is a fact, exaggerated by current conditions and exasperated by unknowns... Paying back what was in effect borrowed from the Social Security Fund will add to the U.S. deficit. This perspective is broad in the sense that it looks at Social Security as a part of the general health of the economy, but it is narrow, in the sense that there is an underlying assumption that Social Security is a contributing factor to the national debt when, in fact, the national debt is contributing to the instability of Social Security."

This has been a very rewarding experience for our team and community. We have collectively learned a lot more about Social Security and its impact on the U.S. budget, as well as how different interpretations can lead to diverging conclusions. We're also grateful for this chance to experiment with new ways to reach collaborative decisions online, based on complex information about sensitive matters. The deeper we explore this opportunity for collective fact-checking, the more learn together. We hope to expand this experiment in coming months, so we can make this process more effective and reliable.

Thanks to all the participants in this Truthsquad for your thoughtful comments and links. Together, we took on a very complex topic, and your contributions helped us all learn useful information about this important issue.

-- Fabrice Florin, Jon Mitchell and Subramanya Sastry