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The federal government "fund" trick has been around for 30-40 years. Here are the funds that I remember: Social Security, Medicare; General, Transportation, Land.

The trick is that for years the Social Security, Transportation and land funds run large "surpluses". This amount is netted against the large deficit in the General fund. What suffers are roads and infrastructure that congress does not build as well as park expansion and maintenance. So when the Minneapolis Bridge collapsed this summer and the “solution” was more taxes is a myth. The solution is that congress spends earmarked gas taxes on roads and bridges and stop raiding the fund. If they can’t spend the money fast enough, then lower the tax.

Next is Social Security. This article should point out that there is not a “fund” or “lock box” for Social Security. Why, because the only investments by law that SSA is allow to buy are US Treasuries. This is like your 401(k) only having investments that are loans to yourself. You might have a lot of “assets”, but you ain’t retiring.

Another poster has it right- SS is breakeven in 7-8 years, then it has to cash in its bonds to make retirement benefits. I hope the Chinese continue to like our treasuries.

The federal government "fund" trick has been around for 30-40 years. Here are the funds that I remember: Social Security, Medicare; General, Transportation, Land.

Following is a list of the major funds taken from the most recent budget:

            DEBT HELD BY GOVERNMENT ACCOUNTS (billions of dollars)

                                    Investment or disinvestment  Holdings
                                   -----------------------------   end of
                                     2006   % of    2007    2008     2008   % of
Description                        actual  total    est.    est.     est.  total
---------------------------------- ------  -----  ------  ------  -------  -----
Old-age and survivors trust fund..  177.0   57.2   180.2   203.6   2176.9   51.5
Civil service retirement & disabil   29.2    9.4     9.3    30.1    729.4   17.2
Hospital insurance trust fund.....   24.9    8.1    11.9     3.3    317.4    7.5
Military retirement trust fund....    4.5    1.5    27.1     7.6    216.5    5.1
Disability insurance trust fund...    8.9    2.9     4.2     5.7    212.0    5.0
Medicare-eligible retiree health..   19.9    6.4    23.5    24.1    120.3    2.8
Unemployment trust fund...........   11.4    3.7    12.8    12.0     91.0    2.2
Federal Deposit Insurance Corp....    1.1    0.3     1.8     2.9     53.9    1.3
Employees life ins & health benfts    4.1    1.3     3.0     2.4     51.4    1.2
Supplementary medical insurance...   15.9    5.1     8.8     6.3     48.2    1.1
Postal Service retiree health fund    0.0    0.0    31.4     6.9     38.2    0.9
Housing and Urban Development.....   -0.2   -0.1    -0.3     0.6     30.7    0.7
Nuclear waste disposal fund.......    1.0    0.3     0.1     0.9     19.7    0.5
Highway and Airport trust funds...    0.6    0.2     1.5    -1.8     18.6    0.4
Exchange stabilization fund.......    0.5    0.2     0.3     0.4     16.4    0.4
Foreign service retirement & disab    0.5    0.2    -0.5     0.1     13.5    0.3
Other government accounts.........   10.1    3.2   -12.8     0.6     75.9    1.8
---------------------------------- ------- -----  ------  ------  -------  -----
Total investment in Federal debt..  309.3  100.0   302.1   305.6   4230.1  100.0

Source: Budget of the United States Government, FY 2008,
        Analytical Perspectives, page 230, table 16-4

As can be seen, over half of the debt held by government accounts is held by Social Security. The next largest holders are the Civil Service Retirement and Disability trust fund, Medicare, and the Military Retirement trust fund.

The trick is that for years the Social Security, Transportation and land funds run large "surpluses". This amount is netted against the large deficit in the General fund.

True. The following graph shows various measures of the deficit:

The actual numbers and sources are at http://home.att.net/~rdavis2/def08.html. The purple line is the "unified deficit" and is equal to all federal receipts minus all federal outlays. This is the deficit that politicians always talk about and includes the receipts and outlays of the government accounts listed in the table above. This deficit is very nearly identical to the public deficit (the blue line) which is equal to the change in the debt held by the public. The green line shows the change in the debt help by the public PLUS the debt held by the Social Security trust fund. Finally, the red line shows the gross deficit which is the change in the gross federal debt. This debt includes the debt held by the public PLUS the debt held by government accounts, shown in the table above. This is the debt that is currently over $9 trillion.

As can be seen, the unified deficit was in surplus from 1998 through 2001. However, the gross deficit has never reached a surplus since 1969. It did come relatively close, reaching a low of $23.2 billion in 2000 but has been over a half trillion dollars per year for the past four years.