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Social Security Trust Funds to be Depleted in 17 Years

Ali Meyers reports for the Washington Free Beacon today, "The Old-Age and Survivors Insurance and Disability Insurance Trust Funds will be depleted in the next 17 years, according to the Social Security Administration's trustees report." (with link to Social Security Administration (SSA) 7/13/17 press release) According to the article, the program will begin to exceed revenues in 2022.

She adds, "By 2034 the combined asset reserves of both funds are expected to be insolvent. Alone, the Disability Insurance Trust Fund will be insolvent by 2028."

She went on to explain:

"It is time for the public to engage in the important national conversation about how to keep Social Security strong," said Nancy A. Berryhill, acting commissioner of Social Security. "People understand the value of their earned Social Security benefits and the importance of keeping the program secure for the future."

"In 2016, the program took in $957 billion in income but still had expenditures as high as $922 billion.

"The Committee for a Responsible Federal Budget suggests policymakers phase in gradual changes that would allow for more time to plan but also promote long-term economic growth.

"The Social Security Trustees continue to underscore the need to address Social Security’s financing shortfall soon," the committee said. "Failure to act would result in all beneficiaries receiving a 23 percent across-the-board benefit cut when the combined trust fund exhausts in just 17 years, when today's 50-year-olds reach the normal retirement age. The SSDI program faces an even more immediate deadline and will deplete its trust fund in 2028."

"Policymakers can still address Social Security's financial problem without making drastic tax or benefit changes, but the window for responsible action is closing," the committee said. "If policymakers are willing to act soon, they can create a plan that strengthens the program’s finances while phasing in changes gradually to give workers time to plan, improving retirement security for vulnerable beneficiaries and promoting long-term economic growth."

She concluded by writing of whether increased taxes are needed to save the Social Security Trust Funds, writing:

"While some argue that taxes should be raised to save Social Security, David Barnes, director of policy engagement for Generation Opportunity, argues that it needs to be reformed instead.

"Some claim that the solution to preserving Social Security is to raise more taxes, but history shows that doesn't work," said Barnes. "In fact, since Social Security was created, payroll taxes have been raised more than 20 times. Twenty times! Yet, the program is still headed towards insolvency."

"Fixing Social Security isn't about throwing more money at the problem—it's about structurally reforming the program so it works better for current retirees and is still around for my generation when we reach retirement age," he said. "Otherwise, without serious change, young people must be given the choice to opt-out."

The SSA press release highlighted three bullets in the 2017 Annual Report to Congress:

  • The asset reserves of the combined OASDI Trust Funds increased by $35 billion in 2016 to a total of $2.85 trillion.
  • The combined trust fund reserves are still growing and will continue to do so through 2021. Beginning in 2022, the total annual cost of the program is projected to exceed income.
  • The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2034 – the same as projected last year. At that time, there will be sufficient income coming in to pay 77 percent of scheduled benefits.

In addition, the press release highlighted the following additional information from the Trustees Report:

  • Total income, including interest, to the combined OASDI Trust Funds amounted to $957 billion in 2016. ($836 billion in net contributions, $33 billion from taxation of benefits, and $88 billion in interest)
  • Total expenditures from the combined OASDI Trust Funds amounted to $922 billion in 2016.
  • Social Security paid benefits of $911 billion in calendar year 2016. There were about 61 million beneficiaries at the end of the calendar year.
  • Non-interest income fell below program costs in 2010 for the first time since 1983. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.
  • The projected actuarial deficit over the 75-year long-range period is 2.83 percent of taxable payroll – 0.17 percentage point larger than in last year’s report.
  • During 2016, an estimated 171 million people had earnings covered by Social Security and paid payroll taxes.
    The cost of $6.2 billion to administer the Social Security program in 2016 was a very low 0.7 percent of total expenditures.
  • The combined Trust Fund asset reserves earned interest at an effective annual rate of 3.2 percent in 2016.

The complete Trustees Report is available here. The report includes literally an endless list of tables and figures.

A detailed, 8-page analysis of the 2017 Social Security Trustees Report by the Committee for a Responsible Federal Budget (CRFB) is here. The Committee's first point will likely get your attention since it says "Social Security is heading towards insolvency" with the second point being that "Social Security's Deficits are large and growing." If that doesn't cause sleepless nights, nothing will.

For the record, the CRFB is a bipartisan a policy organization as one can hope to find in Washington, D.C. For more information about CRFB, click here.

The Concord Coalition is probably somewhat of a left-of-center fiscal policy organization, but even they begin their response -- 7/13/17 press release -- to the 2017 Social Security Trustees Report by saying:

This year’s reports from the trustees of Social Security and Medicare highlight the need for substantial reforms to both programs that can put them on sustainable paths while protecting other government priorities in the coming years, according to The Concord Coalition.

“Once again, the trustees have made clear that without any changes, Social Security and Medicare will continue to claim ever-larger parts of the federal budget as other important federal programs are squeezed down to historic lows,” said Concord Coalition Executive Director Robert L. Bixby."

And at the Peter G. Peterson Foundation,  their analysis of the 2017 Trustees Report begins:

"Today, the Social Security Trustees warned that the program faces major financial challenges, which threaten its sustainability and ability to provide essential benefits to millions of Americans.

"According to the Trustees’ annual report, Social Security’s finances are facing growing pressure due to the aging of the population. As the large baby boom generation enters retirement and Americans continue to enjoy longer lifespans, more and more individuals will collect benefits from the system and for longer periods, while relatively fewer workers will contribute taxes to support it.

"Social Security’s financial imbalance is the result of simple math. Since 2010, the Social Security program has been spending more than it has been taking in, and the Trustam’s trust funds will be exhausted in just 17 years, which will put millions of beneficiaries at risk of large benefit cuts."

The Peterson report includes a chart showing that over the years, fewer and fewer workers are paying taxes to support Social Security beneficiaries:

  • 1970 - 3.7 workers supporting 1 Social Security beneficiary
  • 1990 - 3.4 workers supporting 1 Social Security beneficiary
  • 2010 - 2.9 workers supporting 1 Social Security beneficiary
  • 2030 - 2.3 workers supporting 1 Social Security beneficiary

That one chart pretty-well explains why Social Security is becoming insolvent, not to mention things like the "$550 million worth of bogus applications for Social Security disability," which the government says were filed by Eric Conn. According to the Washington Times' Stephen Dinan today, "Conn paid off a team of doctors to write fake medical evaluations, and paid a Social Security administrative law judge to rubber stamp the bogus applications."

Although I can't say that I've read or watched every news report about the Republicans bills to replace ObamaCare, it seems strange that the nation is embarking on a very large medical welfare/entitlement program, i.e., the repeal/replacement of ObamaCare, with no one talking about the looming insolvency of Social Security while at the same time another large social welfare program is "heading toward insolvency." As the hosts on RedEyeRadio.com like to say, "We're doomed."

Growls readers are encouraged to take a few minutes to write or call their Congressional representatives to complain that Social Security is heading into insolvency, and why Congress and the President are creating yet another welfare entitlement program. Contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact:

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

And ask for a written response. And tell them ACTA sent you.

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