President Lyndon B. Johnson’s administration is the answer to the question of who put Social Security in the general fund, and even that is only partly true. Starting with the fiscal year 1969 budget, the Johnson White House adopted a “unified” federal budget that reported Social Security’s payroll-tax revenue alongside every other federal receipt in a single bottom-line figure. The program’s money was never physically pooled with general tax revenue. The trust funds stayed legally separate, backed by their own dedicated funding stream and governed by their own investment rules, but the presentation change is where the perception began.1Social Security Administration. Trust Funds and the Federal Budget – Social Security History
What Actually Changed in 1968
In early 1968, the Johnson administration adopted the recommendations of the 1967 President’s Commission on Budget Concepts and began presenting a unified budget that combined every federal receipt and outlay, including trust funds like Social Security and highway construction, into one accounting statement.1Social Security Administration. Trust Funds and the Federal Budget – Social Security History Before the change, the government published several separate budgets and Social Security’s finances stood on their own.
The timing mattered. Federal spending on the Vietnam War was climbing sharply, and the administration was pursuing expensive domestic programs at the same time. Social Security was collecting far more in payroll taxes than it was paying out in benefits. Folding those surpluses into the same bottom-line figure as general spending made the federal deficit look substantially smaller than it would have appeared under the old separate reporting. Critics argued the change was designed to mask the true cost of the war and of Great Society programs.
The unified budget was an accounting presentation, not a transfer. Internal bookkeeping still tracked payroll-tax revenue separately from income taxes and other general revenue. But the public perception that Social Security’s money was being “raided” took hold and has persisted ever since.
Where the Payroll Taxes Actually Go
Social Security is funded almost entirely through a dedicated payroll tax. Employers and employees each pay 6.2 percent of wages up to a taxable maximum of $184,500 in 2026, and self-employed workers pay the combined 12.4 percent.2Social Security Administration. How Is Social Security Financed?3Social Security Administration. Contribution and Benefit Base Those taxes flow into two trust funds, the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund, not into the government’s general checking account.
Federal law requires the Secretary of the Treasury to invest any trust fund money not needed for current benefit payments in interest-bearing obligations of the United States government. In practice, the Treasury issues special-issue bonds to the trust funds and uses the cash for other government operations. Each bond is a formal instrument stating the principal amount, maturity date, and interest rate, and declaring on its face that it is backed by the full faith and credit of the United States.4Office of the Law Revision Counsel. 42 USC 401 – Trust Funds
This is the mechanism behind the “raiding the trust fund” story. Cash does leave the trust funds and get spent on other government priorities. What remains is a legally binding IOU from the federal government, and when Social Security needs money to pay benefits that exceed current tax collections, the Treasury must redeem the bonds. There is no discretion to refuse. The United States has never defaulted on these obligations.5U.S. Department of the Treasury. Debt Limit
Congress Walled the Program Off in 1990
Congress formally addressed the accounting concern in the Budget Enforcement Act of 1990. Section 13301 declared that Social Security’s receipts and spending could no longer be counted as budget authority, outlays, receipts, or deficit or surplus for purposes of the President’s budget, the congressional budget, or the Balanced Budget and Emergency Deficit Control Act.6GovInfo. Budget Enforcement Act of 1990 Excerpts From Title XIII of P.L. 101-508 In budget terminology, Social Security became an “off-budget” entity.
The goal was to stop lawmakers from using Social Security’s surpluses to make the rest of the budget look healthier during legislative debates. When Congress sets spending targets and votes on tax policy, the program’s balance sheet is excluded from those calculations. Public budget documents may still show “on-budget” and “off-budget” totals side by side to present a complete picture of federal finances, but the legal firewall prevents Social Security money from being counted toward general fiscal targets.
The Social Security Act itself also directs that payroll taxes collected under the Federal Insurance Contributions Act go exclusively into the OASI and DI trust funds.4Office of the Law Revision Counsel. 42 USC 401 – Trust Funds Those funds cannot be redirected through an ordinary spending bill.
Where the Trust Funds Stand Now
The trust funds are no longer running surpluses. In 2024, the OASI Trust Fund paid out $103.2 billion more in benefits and expenses than it collected in income, drawing down its reserves to approximately $2,538 billion.7Social Security Administration. A Summary of the 2025 Annual Reports By the end of 2025, combined OASDI reserves stood at roughly $2.6 trillion.8Social Security Administration. Social Security Income, Cost, and Asset Reserves The program now redeems its Treasury bonds to cover the shortfall, the reverse of the surplus-investment cycle that operated for decades.
According to the 2025 Trustees Report, the OASI Trust Fund is projected to be fully depleted by 2033. If that happens without legislative action, incoming payroll taxes would still cover about 77 percent of scheduled retirement benefits. The separate Disability Insurance Trust Fund is in stronger shape and can pay full benefits through at least 2099. If the two funds were hypothetically combined, the projected depletion date would be 2034, at which point ongoing revenue would cover roughly 81 percent of all scheduled benefits.7Social Security Administration. A Summary of the 2025 Annual Reports
Depletion is not disappearance. Workers would still pay payroll taxes and beneficiaries would still receive checks, just smaller ones. Closing the gap would require some combination of raising the payroll tax rate, increasing the taxable wage base, adjusting benefit formulas, raising the retirement age, or a mix of all four. Each of those changes requires an act of Congress.