Sunday, May 15, 2011

Trust Fund Exhaustion One Year Sooner -- 2036 !!!

The bullet points taken from SSA's news report of the 2011 Annual Report to Congress:
  • The Social Security trust funds will not meet expenditures in 2036 instead of 2037 and will then be able to pay 77% instead of 78% of expected benefits.  
  • SSA's non-interest income could not meet program costs in 2010 and will not for the next 75 years.  
  • The shortfall for the next 75 years is 2.22% of payroll, instead of 1.92% stated in the 2010 report to Congress.
  • In the next 75 years, SSA would need an additional $6.5 trillion in funds today to meet all expected benefits.  
  • SSA collected $637 billion in taxes on income; $117 billion in interest; $24 billion in taxes on SS benefits; and $2 billion in transfers from the general fund during 2010.  
  • Against the $781 in income, SSA paid out from the old age trust fund $713 billion.  
  • The OASDI trust funds had $2.6 trillion in assets, up by $69 billion from 2010.  
  • 157 million people had taxable earnings covered by Social Security during 2010.
  • 54 million people received $702 billion in benefits in 2010.
  • SSA paid out $6.5 billion to administer the entire program in 2010, or 0.9% percent of all expenditures.
  • The trust fund earned 4.6% interest on assets in 2010.
These statistics tell you and me that in order to continue the Social Security program through the next century, Congress can either increase taxes, decrease benefits, or change participation rules.  Increasing taxes during a recession and with the Republicans in control of the House is unlikely.  Decreasing benefits is political suicide with 54 million people getting benefits currently and knowing that the number will only increase.  

That leaves changing benefit participation.  I have advocated that increasing the age minimum for retirement is the easiest target.  (See my post of May 3, 2011).  Even if increasing the minimum age for retirement causes a shift in some of those individuals to the disability program, that is unlikely to be true to all or even most retirees.  Medical care advances should continue to keep us healthier and capable longer than our ancestors experienced.  

The Congressional Budget office should run the numbers.  The American people should not have loose rhetoric on which to make the decision.  The CBO should give the numbers on lifting the cap on taxable earnings, increasing the tax rates on earnings, decreasing benefits, and increasing the retirement age.  Only with concrete numbers can the American people make intelligent choices, choices that Congress seems unable or unwilling to make.  

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