These funds could be used to pay off U.S. Treasury bonds as they become due, rather than, as now, refinancing those bonds. That would reduce the national debt and reduce interest payments on that debt, thereby enhancing future budget surpluses. The surpluses also could be privately invested to increase income to the Social Security trust fund. Either scenario would reduce the future burdens on taxpayers, if, as more likely than not, we must increase taxes to enable Social Security to meet the program's obligations. Those who believe, however, Social Security will run out of money when baby-boomers retire, since fewer people will be contributing per person drawing benefits, ignore the fact that technological improvements will likely enable a smaller group of working people to supply the needs of a relatively larger group.
Some economists decry the low savings rate of U.S. households.
But, the Social Security surpluses boost national savings. The surpluses relieve the U.S. Treasury from selling an equal amount in bonds. That forces would-be purchasers to invest in state or local bonds for expanding infrastructure or in private investment. Indeed, while many commentators compare our private savings rate unfavorably with those in Germany, Japan, Britain and France, we clearly have the better economy. Social Security strengthens business across the board.