(Image credit: CNN Money)
I thought I wasn’t getting any. I thought that after the Boomers were done with it, the fund would be dry, and the rest of us would have to cross our fingers for lucrative 401Ks.
Not so, according to a 2006 Congressional Budget Office report. The emergency behind Social Security is more of a long, drawn-out problem than an issue on the brink of collapse. If the report is correct, Social Security funds are going to be solvent another 38 years, enabling people born as late as 1984 to potentially benefit.
The report points out a few additional surprises lurking behind Social Security’s veil of bureaucracy:
—–Social Security is currently running an annual surplus
—–Future beneficiaries will receive higher retirement benefits—and pay higher Social Security taxes—than current beneficiaries do, even after adjustments for inflation
—–Outlays will begin to exceed revenues in 2019. The Social Security trust funds will be exhausted in 2046. In the years following trust fund exhaustion, payable benefits would be substantially lower than scheduled benefits because annual outlay would be constrained to equal annual revenues.
(The document was written two years ago. However, projections are likely to still be accurate: long-term projections are necessarily uncertain, but the general conclusions presented in this report hold true under a wide range of assumptions about future demographic and economic trends.)
So how realistic are the two presidential candidates’ policies, given this startling new old and underreported data?
Barack Obama: As president, he wants to impose a Social Security tax increase on anyone making more than $250,000 per year. His intent is to “extend the program’s solvency without cutting benefits or raising the retirement age.“ He has a point. The only detail the media fails to include is that the tax cuts’ benefits will only start to kick in after 2046.
John McCain: He’s currently under fire for previously alluding to policies that would increase payroll taxes and continue on with George W. Bush’s private investment accounts for retired people. Being in charge of your own investments sounds good, but what if the market tanks (Depression-era conditions inspired Social Security in the first place)? The feasibility of such a plan also comes into question in light of the fact that Social Security is still working…for the next 38 years.
Where did the common misconception about Social Security’s imminent collapse come from? According to Dean Baker of Beat the Press, it’s the “result of a well-financed scare campaign by people like Peter Peterson.”
I’m not intimate with Peterson or the people like him, but having accurate Social Security information feels like a windfall. The next president will be just in time to put in a viable long-term plan to rescue or revise the program. Meanwhile, if it does collapse, I’ll still be able to cash out a few payments.
I welcome them.
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ONLY if congress cashes out all the bonds they bought with Social Security funds… of course Congress is going to put out a report like this and use toadies like you to parrot it.
Ignore the trust fund. It effectively no longer exists. OMGWTFBBQ? The Social Security Trust Fund has no cash, only securities. But securities are good. They earn interest! These are Treasury bonds. That’s right, the Federal government is writing itself IOUs. All of Social Security’s revenue surplus is poured straight back into general revenue and replaced by T-bonds. Technically Social Security can get its money, once outlays exceed revenue. By redeeming those T-bonds. The money to do that will come from either tax revenue or new public debt. Which is almost exactly the same as if the trust fund didn’t exist.
Better yet, even if the trust fund runs out, Social Security can still pay at least 78% of benefits and those will be larger than today’s, based on the future working population paying at the current payroll tax rates. Most of Social Security is pay as you go and will continue indefinitely. You will only end up with nothing if you let them take it away from you.
Another BS article touting Social Security is fine. And like the others, we hear more about how SS has an actual surplus, though we don’t learn that these surplus funds were long ago stolen by Congress and replaced with a stack of good ol’ IOU’s. Furthermore, not a mention of the far bigger problem - medicare and medicaid, especially after Bush handed over more loot to the Pharma companies.