Bad news on the Social Security front: Social Security on Pace to be Drained by 2037
New congressional projections show Social Security running deficits every year until its trust funds are eventually drained in about 2037.
This year alone, Social Security is projected to collect $45 billion less in payroll taxes than it pays out in retirement, disability and survivor benefits, the nonpartisan Congressional Budget Office said Wednesday. That figure swells to $130 billion when a new one-year cut in payroll taxes is included, though Congress has promised to repay any lost revenue from the tax cut.
And we all know what a Congressional promise is worth. Continuing:
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 other words, it’s gone -ed.]. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment with interest.
Social Security’s leftist supporters constantly claim the program is fully funded thanks to these Treasury bonds, but the people on the hook for repaying these bonds when they are redeemed are the American taxpayers – which is why these bonds are the lion’s share of the national debt, currently over $14 trillion and counting. In his State of the Union address President Obama discussed winning the future but he offered little leadership on Social Security – a financial burden we are placing on future generations in the form of the national debt.
However, it should be remembered that both parties have avoided dealing with this growing problem for decades (Newt Gingrich, anyone?) but those days are drawing to a close as the financial burden Social Security is about to place on the economy is drawing ever closer. Therefore, I believe reform is inevitable because the status quo is unsustainable, but reform is still hampered by those who defend the existing system and by those who would rather completely avoid the issue altogether as though their lives depended on it. After all, future generations are not current voters.