The Social Security system relies on its own independent source of funding and it is not part of the government's Federal Budget. The taxes that are raised for Social Security are used for Social Security, rather than becoming part of the government's general budget. However, the Social Security system does use a form of investment which involves lending money to the US government. The money which the government borrows from the Social Security program adds to the US National Debt.

The US National Debt is currently about 13.8 trillion dollars. In 2010, the government paid 414 billion dollars in interest on this debt. The 2008 economic crisis and the bailouts associated with it saw the US National Debt growing even faster than it had previously been doing.

The Social Security system is one of the most expensive programs run by the US government, exceeding even defense spending in its share of the budget in many years. Social Security has traditionally been funded by the taxation of workers, which has provided sufficient funds to pay benefits to retirees and those who are eligible to receive other types of Social Security benefits. However, it is predicted that the expenditure of the Social Security system will exceed its income from taxation by the year 2017, due to factors such as the ageing population of the United States as the Baby Boomer generation enters retirement. The Social Security system will then become revenue negative, collecting less than it needs. This will result in money having to be drawn from the Social Security Trust Fund in order to support the Social Security system.

It has been estimated that the Social Security Trust Fund will be able to continue funding the Social Security program until about 2042 or 2052, at which time it will be depleted. The Social Security system would then become completely dependent on its tax revenues, which may not be enough to meet all of its promised expenditure on benefits. However, changes to the system or the US economy could alter the future of the Trust Funds and the use of the Trust Funds will have a significant impact on US National Debt.

The Social Security Trust Fund is a fund composed of US debt investments. These types of investments are essentially loans to the US government. The government is able to use the money that has been invested, but when the investment is cashed in, the government must repay the money, with interest. Social Security is one of the major holders of US National Debt.

When National Debt is discussed it is often thought of only in terms of the money owed by the US government to non-federal entities, but this disguises the fact that the government also owe a lot of money to federal entities, such as the Social Security program. This is, in a sense, money that the government owes to itself, although it is owed by one government entity to another. When the debt owed to the Social Security program and other federal entities is taken into account, it becomes clear that the US National Debt is much larger than it is often portrayed as being.

A large proportion of the US National Debt is currently owed to the US Social Security system. In 2000, this portion of the National Debt exceeded one trillion dollars, and it has been estimated that the debt will be equivalent to about 9000 dollars per person by the year 2015. The share of the National Debt that is owed to the Social Security program actually exceeds the sum that is in the Social Security Trust Fund.

Since the summer of 2010, more money has been taken out of the Social Security Trust Fund to make benefits payments than has been being paid into the fund. This means that the Social Security system is beginning to reclaim the money it is owed by the US government. If the Social Security program is to continue functioning once the funds it gathers from taxation are no longer able to meet its needs, it will need to collect on the debt that it is owed by the US government. This makes the portion of the National Debt that is owed to the Social Security system very significant.

The government will need to find a way to repay this portion of its debt or to make changes to the Social Security system itself in order to keep the program running. This may be done through borrowing more money and increasing the National Debt, cutting costs within the Social Security program (for example by raising the retirement age) or raising taxation. As the Social Security system cashes in its Social Security Trust Fund, the government will have to seek other buyers for its National Debt. It is likely that more of this debt will have to be sold on private financial markets, which could force a significant increase in the interest rates.

The amount of interest that the government is paying on its National Debt is already huge. Although the Social Security program is one of the most expensive programs supported by the government, the biggest single expenditure is not any of the elements of Social Security, nor any of the components of the government's other programs. The largest single cost for the US government is the interest it pays to service its National Debt. A rise in this interest payment will be very significant.