This will collapse the Social Security system too as all the Social Security Trust Funds have been loaned to the General Fund and spent
All the revenue collected from the payroll tax for SS and Medicare is immediately converted into non-market, interest bearing T-bills and held in the trust funds. Federal pension money is treated similarly.
The Trust Funds are held in intra-governmental holdings in contrast to the publicly held debt. Both are part of the total national debt.
SS and Medicare are running annual shortfalls (benefits exceed revenue), which are covered by cashing in the T-bills from the General Fund to pay benefits fully.
When the Medicare and SS Trust Funds run out of T-bills to cover the shortfalls, by law, benefits are reduced to revenue received. It is estimated that this would result in a 20% cut in benefits.
The T-bills held in the SS and Medicare Trust Funds are backed by the full faith and credit of the USG, just like the T-bills held by China and Japan. A default would hurt all T-bill holders.
Medicare and SS are unsustainable actuarially. They must be reformed.