Social Security is not sustainable over the long term at current benefit and tax rates. As the chart indicates, within 10 years the program will begin paying more in benefits than it collects in taxes. By 2041 the trust funds will be exhausted. But this assumes that the federal government stands ready to redeem the bonds held by the Social Security Fund. This is, in effect, a double hit to the federal budget. First, there will no longer be any excess funds that the federal government can borrow from the Social Security program. Second, the government will be forced to borrow money in the open market to obtain the funds needed to cover the shortfall in Social Security receipts.

The red area of the chart indicates the point at which there is no longer any excess funds from Social Security that can be used to fund other operations of the government. That excess amount will be shrinking each year during the run-up to 2017, thereby causing increased external borrowing to fund the projected deficits.