As seen in the accompanying charts, the nominal deficit is immense. These figures give a false impression, however, because they do not account for inflation. The Social Security Administration estimates that long-term annual inflation will be about 3.5 percent. Appendix B adjusts the annual figures with the inflation estimates used by the Social Security Administration. The long-term deficits fall dramatically when expressed in today's dollars, but the gap is still huge.
Present value is another way to calculate the long-term debt.
In other words, because money today can be invested to earn a return, the unfunded liabilities of the Social Security system could be offset completely if lawmakers came up with a big enough pile of cash to invest today. The bad news is that collecting that much money today would require imposing tax rates of more than 100 percent on everyone in the country. If the government saved excess payroll tax revenues, then the answer would be yes. Surpluses are spent on other programs, however, and the Social Security Trust Fund receives IOUs from the Treasury in exchange. These IOUs represent claims on future taxpayers, not a store of wealth.