This afternoon, in a press conference on the topic of raising the debt ceiling, Rep. Louis Gohmert said that "there is such a thing called the Social Security Trust Fund, and the Social Security Trust Fund will be able to pay seniors their checks for many months to come even if Congress does nothing.”
I'm not sure what is more lamentable here: this misconception itself, which sounds like an honest mistake, or the fact that Gohmert implied that the President would understand it if "he'll do his homework."
Interestingly, the end of the video includes some more remarks of Gohmert's that were not transcribed, in which he refers to a Joint Economic Committee report that he claims supports this view.
The problem is that the Trust Fund holds nothing but U.S. government bonds. In order to pay beneficiaries with those assets, the Social Security Trustees would have to sell them on the open market. And as Fed chair Ben Bernanke and many others have warned, failing to raise the debt limit and defaulting is likely to lower the prices of outstanding debt considerably. Cashing out abruptly like that would probably not be a very efficient way to finance benefit payments.
It's also true that annual Social Security Trust Fund income will exceed costs until 2023, per the latest SSA Trustees report. If income consisted only of taxes, the government could simply earmark payroll taxes for benefits and pay them in full. But it turns out that net interest earned on those government bonds in the Trust Fund is about $100 billion of annual income now, or practically the entire amount of the Social Security surplus. If the government were to completely default on its debt, annual payroll taxes would be barely enough to cover annual benefits now, and they would not be enough very soon, as the Baby Boom continues to retire.
(An additional complication is that the tax relief package passed last December actually lowered the payroll tax rate for 2011 by 2 percentage points, for which the Treasury compensates the Trust Fund via borrowing. Presumably the tax rate will rise for 2012, but I interpret this to mean that if the Trust Fund were indeed to somehow "go it alone" without general revenue, it would come up short this year.)