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Social Security and the U.S. Federal Budget

Social Security’s Financing, Social Security’s Treatment Within The Federal Budget, Social Security’s Effect On The National Economy



The Social Security Old-Age, Survivors and Disability Insurance (OASDI) programs play an important role on both the individual level and in the overall United States economy. The most visible influence of the programs is as a source of income when workers retire, or in instances of death or disability. Less visible, but equally important, are its effects on the national economy. Social Security affects economic output primarily through its influence on individuals’ decisions on how much to work, when to retire, and how much to save. As the largest function in government, based on expenditures, Social Security also contributes to government saving and spending.



This entry first describes how the OASDI programs are financed and how they relate to the federal budget. Next, the entry examines determinants of economic output and the influence Social Security exerts on two of those determinants: labor supply and national saving. Finally, it discusses the role of economic growth in meeting the needs of society and two options economists and policymakers have considered for using Social Security to increase national saving, and thereby increase economic output.

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