The Social Security Trust Funds and Public Saving

Abstract

The Social Security program is one of the most popular and successful government programs in the United States. At the end of 2004, the OASDI trust funds held almost $1.7 trillion in Federal government bonds and notes. It is projected that the trust funds assets will be equivalent to over 20 percent of GDP by 2020. Several recent studies have concluded that the increases in the trust funds have been more than offset by reductions in surpluses elsewhere in the federal budget. Consequently, public saving has fallen as a result of the trust fund build-up since the mid-1980s. This study reexamines this issue and finds that the trust fund has had no impact on the rest of the federal budget.

Keywords: Social Security, federal budget, saving

JEL Classification: E21, H55, H61