Posted: December 7, 2012
When I was growing up, I was always told that social security probably wouldn't be around by the time I was to begin collecting. I never believed the nay-sayers, mostly because I didn't think it would ever be politically feasible to do away with the retirement benefit program entirely. However, as the nation's fiscal crisis comes to a head in the coming weeks, it's apparent to me that something needs to change with the current social security system if anyone wants to see it functioning beyond 2033 - four years after I would begin collecting what I am supposed to have coming to me.
Most democrats would have us believe that social security is not in danger since every scheduled payment can be made for another 21 years without making any changes. Republicans, on the other hand, are mindful that social security ran a deficit of $48 billion last year and is on pace to lose $86.6 billion by 2015. The program currently represents more than one-fifth of all federal spending.
Social security is a pay-as-you-go system. In other words, payments collected today are immediately used to pay benefits. Since social security is a big money-maker for the federal government, the funds are loaned to other parts of the government. In exchange, social security is given interest-bearing Treasury bonds which now total $2.7 trillion. So, really, the money raised through social security is paying for other government programs and will have to be paid back at some future date. Nice accounting maneuver, huh?
There are a few suggestions promoted by Republicans that may help prolong social security's financial viability. First, the cap on income subject to the payroll tax could be raised; the cost-of-living adjustments could coincide more accurately with the actual inflation rate; or the retirement age could be raised by a couple of years.
Up until this week, no democrats wanted to touch social security. But now some on the left side of the aisle are at least "open" to discussing possible changes to the program.
Remember what the impending "fiscal cliff" means: Simultaneous tax hikes and spending cuts go into effect at the end of the year unless a new deal gets passed.
Beginning in 2013, the countdown to the end of social security as we know it is down to 20. Common sense tells me that it's not too early to address the problem now, rather than wait another decade. Then again, our elected officials in Washington,D.C., don't seem to get anything done until it's the last minute - so I wouldn't bet that social security will be part of the solution - yet.