Sick and getting sicker, Social Security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037, congressional budget experts said Wednesday in bleaker-than-previous estimates.
The massive retirement program has been suffering from the effects of the struggling economy for several years. It first went into deficit last year but had been projected to post surpluses for a few more years before permanently slipping into the red in 2016
This year alone, Social Security will pay out $45 billion more in retirement, disability and survivors’ benefits than it collects in payroll taxes, the nonpartisan Congressional Budget Office said. That figure nearly triples — to $130 billion — when the new one-year cut in payroll taxes is included.
Congress has promised to replenish any lost revenue from the tax cut, but that’s hardly good news, either, adding to the federal budget deficit. In another sobering estimate, the congressional office said government red ink this year will increase to $1.5 trillion, the most in U.S. history.
More than 54 million Americans receive Social Security benefits, averaging $1,076 per month.
The outlook for the program has grown more sour as the nation has struggled to recover from the worst economic crisis since Social Security was enacted, during the Great Depression. In the short term, Social Security is suffering from the weak economy that has payroll taxes lagging and applications for benefits rising. In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits.
The projected deficits add a sense of urgency to efforts to improve Social Security’s finances. For much of the past 30 years, the program has run big surpluses, which the government has borrowed to spend on other programs. Now that Social Security is running deficits, the federal government will have to find money elsewhere to help pay for benefits.
“So long as Social Security was running surpluses, policymakers could put off the need to fix the program,” said Andrew Biggs, a former deputy commissioner at the Social Security Administration who is now a resident scholar at the American Enterprise Institute. “Now that the system is running deficits, it simply becomes clear that we need to act on Social Security reform.”
President Barack Obama said in his State of the Union address Tuesday night that he wanted “a bipartisan solution to strengthen Social Security for future generations.”
The president however has not embraced recommendations from a debt commission he appointed last year, including one that would gradually increase the full retirement age, from 67 to 69, over the next 65 years.
But Obama did lay down some markers for making Social Security closer to solvent.
“We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities, without slashing benefits for future generations and without subjecting Americans’ guaranteed retirement income to the whims of the stock market,” Obama said.
The program has been supported by a 6.2 percent payroll tax, paid by both workers and employers. In December, Congress passed a one-year tax cut for workers, to 4.2 percent. The lost revenue is to be repaid to Social Security from general revenue funds, meaning it will add to the growing national debt.
Social Security has built up a $2.5 trillion surplus since the retirement program was last overhauled in the 1980s. Benefits will be safe until that money runs out. That is projected to happen in 2037 — unless Congress acts in the meantime. At that point, Social Security would collect enough in payroll taxes to pay out about 78 percent of benefits, according to the Social Security Administration.
The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment, with interest.
“Social Security taxes are not going to pay for the spending, so it’s got to come from somewhere else,” said Eugene Steuerle, a former Treasury official who is now a fellow at the Urban Institute. “We can go through long arguments about whether its owed money by the trust funds or not, but that doesn’t alleviate the simple fact that it’s got to come from somewhere.”
Social Security supporters are adamant that the program will be repaid, just as the U.S. government repays others who invest in U.S. Treasury bonds.
“Its’ an IOU that is backed by Treasury bonds and the faith and credit of the United States government,” said Sen. Bernie Sanders, I-Vt. “It is the same faith and credit that enables us to borrow from rich people and from China and from other countries. As you well know, in the history of this country, the United States has never defaulted on one penny owed to a creditor.”
Copyright © 2011 The Associated Press
2 thoughts on “Social Security: Sick and getting worse”
Rob the graveyard before their very eyes, but wary be of cutting back on the juice that keeps the corpse of liberty twitching for public consumption.
Bind the people with debt not their own, owing to straw men of foreign conflict and cave dwellers that will never reach their door as the Frankenstein monster clothed in corporatism and named diplomacy ravages the ranks in the name of nation building while their sovereignty lies in ruin surrounding them.
Lastly, strip them of the clothing of opportunity, youth, honor, and pride, wielding lash after lash to flay the skin of freedom from their backs.
Here is our village, our dying smoking ruin.
Doh…!? With possibly as many as 18 million people out of work from the long term, hardcore unemployed to those most recently excreted from the workforce, no wonder SS contributions to the fund have dwindled.
Also our leadership has been plundering the fund of hard cash assets since the Nam era when LBJ and his ‘advisers’ came up with the idea of pilfering the fund and pitching U.S. Treasuries into a so-called ‘locked box’ for future redemption. 2010 was the first year where the fund had to redeem 28 billion of these ‘IOU’s’ in order to make the fund solvent and on this will go in the worst of times.
Granted many if not most folks didn’t pay into the fund anywhere near the benefits they are receiving and with citizen longevity increasing as time goes by, the fund will necessarily become insolvent unless contributions are increased through whatevever method along with the government keeping their mitts off the money. Of course the worst thing they could do is to privatize it and turn it over to Wall Street to plunder with the promise their wise investing will plump the trust. Yep, just like they created their bundled mortgage scam too that has damn near financially trashed the Republic.
Then too in addition to a bloated defense budget there’s an additional 200 billion per year being pitched at the war on ‘terror’ along with maintaining two engineered, protracted faux conflicts in Iraq and Afghanistan and Homeland Security along with all its subsidiary agencies on the home front. No problem with that though. Never question the defense budget, it’s the most sacrosanct ‘necessary’ expenditure of all, but to hell with the citizens who are taxed to support these boondoggles.
Seemingly we’re toast and no one, I mean no one at the top gives a rats butt worth of concern for “We the People”…! All they do is talk, talk, and talk some more with no constructive solutions whatsoever. They’re more focused on their incumbency and the next election. They play it safe while the Republic dies before our very eyes. : |
Carl Nemo **==
Comments are closed.