Where Do Our Federal Tax Dollars Go? Just Watch.
October 25, 2012 at 1:36 pm
http://www.offthechartsblog.org/where-do-our-federal-tax-dollars-go-just-watch/
Posted by: CBPP
Posted in: Federal Budget, Federal Tax
http://www.offthechartsblog.org/where-do-our-federal-tax-dollars-go-just-watch/
Posted by: CBPP
Posted in: Federal Budget, Federal Tax
In this brief video — a companion to our backgrounder on the topic — CBPP analysts Chye-Ching Huang and Chuck Marr explain what the federal government does with the money it collects.
You characterize Social Security as being an unfunded government entitlement program. This is not only wrong it’s dangerous. It is funded through taxes paid by participants. Showing it next to military and other spending implies that it is an actual expense not just an expenditure. The reason Social Security is relevant to deficit discussions is because the government invests Social Security funds in US treasury bonds. To pay Social Security benefits the government redeems these obligations.
Treasury bonds are part of our national debt whether they are purchased by China or Social Security. Redeeming them is part of the budget. If Social Security payments from redeeming Treasury bonds are a big problem then redeeming China’s holdings should be considered a big problem as well. If the Social Security funds were invested in something other than Treasury bonds Social Security wouldn’t be an issue. But then the government wouldn’t have all that Social Security money to spend on other programs would it? That’s the real problem, not Social Security.
Without any changes to Social Security, according to the most recent Social Security Board of Trustees Report, Social Security will be able to pay full benefits until 2037, 25 years from now. After 2037, again, without any changes to the program, Social Security will still be able to pay about 75% of the scheduled payments we would normally pay to each eligible person. Social Security is not broke nor is it paid for by tax dollars.
In this Policy Basics we take a unified look at the budget, which means we include Social Security on the spending side and payroll taxes on the revenue side. For a discussion of the issues you raise, take a look at our paper on Understanding the Social Security Trust Funds.
This is the most concise, centered explanation of how our tax dollars are spent.I wish this had been widely disseminated early into this campaign season. There are so many low-information voters who could really use this information in deciding on a Presidential candidate…..