In all the talk about the deficit and Social Security one rarely hears of the heroic role that Social Security plays in masking a $170 billion in budget shortfalls.

During the opening remarks of yesterday’s markup of Sen. Gregg's (R-NH) Stop Over-Spending gambit bill, committee Republicans continually advanced the idea that not only could we not tax our way out this problem, but that curtailing entitlement spending was the only way to close the gaping hole in the budget. Gregg’s package has several proposals aimed at reducing Social Security, Medicare, and Medicaid spending. Republicans droned on and on about how much of a threat Social Security (and Medicare and Medicaid) is to the budget.

Interesting. Republicans have the situation completely backward. Social Security is just fine, thank you very much. It’s working exactly the way it was designed to work. The General fund’s (the government’s operating budget) massive deficits are the problem. Each year, Social Security loans billions of dollars to federal government. In 2005, the Social Security trust fund took in $171.8 billion more than it paid out in benefits. The trust fund loaned, through purchasing government bonds, that $171.8 to the federal government’s General fund. So, FY2005’s reported $319 billion deficit would have been $490.8 billion without Social Security performing its civic duty of buying government bonds.