Brenton Smith, writing for FedSmith.com, hits on a point that others have missed in the question of how Social Security affects the overall budget deficit:
Social Security is not self-supporting as [Oregon Sen. Jeff Merkley] claims. It receives by law (Public Law 98-21) annual general fund transfers, mainly the revenue from the taxation of Social Security benefits. This revenue appears on-budget, and is dollar for dollar deficit spending. Over the past three years, Social Security has by law created more than $75 billion of “On Budget” deficit – according to the Trustees.
As I’ve written for Real Clear Markets, I think the Social Security/budget deficit issue is broader than this: when we consider the “unified budget deficit,” which is by far the most common figure used regarding the federal budget, a decline in Social Security’s funding health has basically a dollar-for-dollar impact on the deficit. So if, say, Social Security for some reason collected $10 billion less this year than anticipated then the unified budget deficit will rise by $10 billion. The intergovernmental transfers to and from the trust funds matter for Social Security’s solvency, but on a budget-wide basis those cancel each other out.