(Draft-maybe I'll complete this later)
In order to understand how Krasting went so wrong we have to go back to fundamentals.
Social Security is based on an insurance model. It collects premiums in the form of payroll taxes and funds payouts in the form of disability, survivor, and retirement benefits. Although the monthly payouts are based on the amount of money paid in the total payout is not, if you die on your 65th birthday and have no eligible survivors you get nothing. On the other hand if you live to 115 you get an inflation protected annuity, as you would if you were totally disabled at 35 even if that payout vastly exceeded your actual contributions. It's insurance and not savings.
Social Security has four potential sources of income. First and foremost is a tax on wage income, Social Security takes 6.2% of your paycheck which is matched by an additional 6.2% from your employer for a total of 12.4%. Additionally since 1983 Social Security has taxed benefits on higher income retirees. Over the long run the amount taken from wages and tax on benefits is designed to pay all benefits with a modest amount left over to serve as a reserve in a time when receipts lag because of economic conditions. These overages are invested in interest earning Special Treasuries and held in two Trust Funds, one for the Disability Insurance program (DI) and one in the Old Age/Survivors insurance program (OAS) which are for most purposes treated together as something called OASDI. In good times the OASDI Trust Fund(s) more or less sit there absorbing any cash surpluses from tax collections not needed to fund current benefits and interest on its total balance which combination has built that balance to $2.5 trillion dollars. But this point is crucially important, the Trust Fund does NOT finance Social Security in normal times, instead SS is a Pay-Go system where current benefits are financed from current receipts, the Trust Fund only being needed as a backup if and when.
Well if and when is now. The DI Trust Fund has been running negative for a couple of years now DI: the Sick Man of Social Security. The damage isn't mortal, the DI Trust Fund having accumulated assets of $202.5 billion, but then again it is down $5.4 billion for the year meaning that benefits are exceeding not only taxes collected but also the interest accruing on the TF. Meaning DI needs to be fixed.
On the other hand DI is only about 10% of the size of OAS which on the whole is doing fine. At the end of Nov it was also down $4.4 billion but this was out of a balance of $2.3 trillion and we know that for technical reasons November is a down month, December should make up that deficit and more for a year over year surplus in OAS. On paper. But here is where things get deep. In any month in which either DI or OAS receipts from taxation trail costs the difference has to be made up with cash from the General Fund which is offset by retirement of certain maturing bills and notes. But not necessarily all of them.