Summary: The President's recent proposal for addressing Social Security and the use of the budget surplus is complex, which makes it all the more important to focus on what it does -- and what it does not do -- for the nation's long-term future. In summary, the President's proposal does reduce debt held by the public from current levels, thereby also reducing net interest costs, raising national saving, and contributing to future economic growth. The President's proposal also changes Social Security financing in two fundamental ways: it promises general funds in the future by, in effect, trading publicly held debt for debt held by the Social Security Trust Fund and it invests some of the trust fund in equities with the goal of capturing higher returns over the long term. However, the President's proposal does not have any effect on the projected cash flow imbalance in the Social Security program's taxes and benefits, which begins in 2013. In GAO's view, the President's proposal does not represent a Social Security reform plan and does not come close to saving Social Security.
