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Truth Squad: How healthy is the Social Security trust fund?

By the CNN Wire Staff
updated 2:47 AM EST, Sun December 11, 2011

Editor's note: Part of the CNN Republican debate fact-checking series

(CNN) -- The statement: The Social Security payroll tax cut that President Barack Obama is seeking to extend "will cost the Social Security trust fund another $112 billion, and we don't have enough money this year in the Social Security trust fund to put out those checks -- which means we have to go to the general Treasury to get the money." -- Republican presidential candidate Rep. Michele Bachmann, at Saturday night's ABC News debate in Iowa. She added that the tax cut "blew a hole" in the trust fund.

The facts: The Obama administration says the Social Security payroll tax cut is projected to cost about $112 billion in the coming year. The administration says the money that would have gone to the trust fund would be made up from general revenues, with "no effect on individuals' current or future Social Security benefits."

Social Security paid out $712 billion in benefits and took in $663 billion in taxes in 2010, leaving it with a revenue shortfall of $49 billion. That's according to figures released in August by the system's trustees. But interest on its trust fund added another $117 billion, bringing the trust fund's total balance to $2.6 trillion.

Under current projections, the trust fund -- created in the 1980s to prepare for the retirement of the Baby Boom generation -- will run out in 2036, the trustees reported in May. At that point, the remaining income will pay about 77% of scheduled benefits.

The verdict: Misleading. Bachmann is correct in saying the payroll tax cut will require a transfer from the Treasury to replace the money that would have otherwise gone to the Social Security trust fund. But she's mistaken when she says there's not enough money in the trust fund to cover current benefits.

CNN's Matt Smith and Lindsey Knight contributed to this report.

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