Social Security Program
Posted: March 25, 2016
Social security, the largest single government program, is in trouble. Not because forecasters project the social security trust fund will run out of money by 2034, but because it's running short of money now. Since 2010, the government has paid out more in benefits every year than it has collected in social security taxes.
The social security program in this country makes payments to more than 50 million Americans each month. It pays for the annual shortfalls by drawing on its trust fund, which would be fine if the money in the trust fund hadn't been spent years ago to pay for the rest of government.
To make good on the IOUs in the trust fund, the government has to skim from general tax revenue or borrow each year to make up the difference - an estimated $81 billion this year and an estimated $361 billion by 2015 as more Baby Boomers retire.
Social Security's impending doom, however, may not be so decisive. According to Max Richtman, president and CEO of the National Committee to Preserve Social Security & Medicare, social security benefits will be paid in full until 2034. After that, Richtman said there will be enough income coming into the program to pay 79 percent of all benefits. He suggests that Congress make modest reforms to the program as it has done in the past.
The last time the social security program was touched was by President Ronald Reagan. He rescued the program with a package of benefit cuts and tax increases in 1983, back before compromise was a dirty word in Washington, D.C. It appears to me that something similar would work again today if the Republican-majority U.S. Senate would agree on something to help the program.
One of the two funds comprising social security, Disability Insurance (DI), is expected to run out of cash in the fourth quarter of this year. The 48.1 million beneficiaries who are either seniors or survivors paid out $145.1 billion last year compared to collecting $114.9 billion.
One of the easiest ways to help the social security program in this country is to raise the retirement age. It would reflect the fact that people are living longer. However, I am afraid that once again, more payroll taxes would be collected from higher-income workers.
RANDOM NOTE: Like many others, I picked Michigan State to win the NCAA Men's Basketball Tournament. I heard a report that as many as five million people did the same thing.