Here’s a strategy that will please all of you who want to start taking the meat ax to the federal budget:
Pay the $50 bn due to both SS and Medicare ($100 bn total) out of their Trust Fund assets instead of out of August tax receipts. This reduces the problem to which $40 bn to cut, instead of which $140 bn.
That would actually be an amount small enough that it could probably be done, and it would be fascinating to watch the process as the Administration revealed its line item by line item priorities.
The trust fund does not contain assets, just unfunded liabilities, which is why the trust funds are included in the $14.3 trillion national debt. Here is what the Congressional Budget Office said about trust funds:
"When a trust fund receives payroll taxes or other income that is not needed to pay benefits immediately, the Treasury credits the fund and uses the excess cash to reduce the amount of new federal borrowing that is needed to finance the governmentwide deficit. That is, if other tax and spending policies are unchanged, the government borrows less from the public than it would in the absence of those excess funds. The reverse is the case when revenues for a trust fund program fall short of expenses. Thus, the balances of trust funds are not a measure of resources available to pay future obligations for the respective programs; those resources will need to come from federal revenues or additional borrowing in the years those obligations are due."