Social Security does not contribute to the debt/deficit. Revenue to SocSec is from payroll taxes paid by working people, not from general revenues. Look at your paycheck. Your employer makes an equal contribution. Where do you think the 2.6 trillion in U.S. Treasury Bonds in the Social Security Trust Fund came from, and where do you think benefits are paid from?
The only reason SocSec deficits (more going out than comes in) look like they affect the national debt and deficit is because Congress chose not to count the Treasury Bonds SocSec buys until they are sold. When the bonds were bought they seemed to decrease that year's debt/deficit, or contribute to its surplus. In reality it was just Congress shifting part of current deficits to future years. And saying that SocSec benefit payments are part of non-discretionary spending and part of the budget is untrue, unless you are going to steal the Social Security Trust Fund from the workers who have contributed to it. (That would mean that payroll taxes were in reality just a massive tax hike on working people and their employers. Again, look at your paycheck. And remember that taxes are not taken out of wages above $106,800.00; i.e., from the wealthy.)
Raising the retirement age and lowering benefits will not affect the national debt/deficit by one dime. It will merely enable more shifting of current deficits onto future years. Remember this the next time Congress freezes cost of living adjustments to retiree's benefits.
Social Security is not an entitlement. It has been paid for by the workers who are now or will be collecting benefits. It is entirely self-funded except for administrative costs. And those administrative costs are much lower than they are for private retirement plans (the plans that disappear when companies go bankrupt or when financial crises cause Wall Street stocks to tumble).
The next time you see an article (or quiz) that lumps in Social Security with entitlement spending (which of course "must be restrained"), you can be sure that the writer is either ideologically driven or is ignorant of the facts.
The above piece was originally posted in response to a quiz titled "Think you're smart about deficits? Try this" by CNN Money's Jeanne Sahadi, which I felt was biased.