Social Security still facing some big challenges

The Social Security Administration delivered another reminder today that it's running out of money to pay promised benefits. Although there's been some improvement in the long-rate forecast, the projected disaster dates remain the same as last year: benefits will exceed tax income in 2017 and the "trust fund" will run out of money in 2041. At that point there would be enough money to pay about three-fourths of promised benefits unless there's been some cut in benefits or increase in taxes.

This report from the Center for Retirement Research puts the latest information in perspective for those who are interested in digging into the subject. I think a Social Security tax increase is inevitable, but I hate to see it happen before 2017. If it's enacted earlier, Congress will just spend the money on other things, as it does now with the current Social Security surplus. That borrowing and spending is building up the IOUs in the trust fund, which we'll turn to in 2017. I think the money in the trust fund will be there because the government will borrow the money from someplace else to repay trust fund debts. However, I can't see making the debts even bigger by giving Congress more money to spend in the meantime.

Comments

I agree wholeheartedly. The trust fund has sufficient IOUs and the Congress and President would indeed spend any increase. I say this as a recipient of Social Security. I among others will not be affected by the zero balance in 2042 since I expect to be elsewhere. I think the Medicare problem is nearer term and should be improved, that is IMPROVED. Not cancelled or reduced. One way would be to tax excess funds made by medical providers, insurors and big pharma. I would also provide RICO type recoupment of funds fraudulently obtained by such providers and taxing big pharma which spend more on advertising than 50% of their research budget.