Remember that guy Nero who supposedly fiddled while Rome burned? Well we have a President (and many past presidents of both parties) and Congress doing the same thing. In this case they are fiddling with the future of Social Security and the retirement security of all Americans. It’s not as if there is any secret or the problem is creeping up in us. Rather it is a matter of ignoring a problem until its so big we all get to fail … and this from the guys promoting “free” preventive health care to save money. What a joke!
Our elected representatives have been shown the problem and over the years; several alternatives to deal with it and yet they do nothing. A major financial crisis looms and we are worried about building windmills because it is politically more palatable.
Here’s the deal; the incoming taxes for Social Security are not only no longer generating a surplus to buy treasury bonds for the future, the incoming taxes are insufficient to pay current benefits. This means when interest on bonds is no longer sufficient past treasury bonds have to be cashed in thus depleting the Trust Fund (actually an accounting function). In twenty years all of the Trust Fund will have been used to pay benefits and then … Well, everyone on Social Security gets a permanent 25% reduction in their monthly benefit.
I also call your attention to this sentence below: “The surpluses also helped mask the size of the budget deficit being generated by the rest of the federal government.”
From the Washington Post:
For nearly three decades Social Security produced big surpluses, collecting more in taxes from workers than it paid in benefits to retirees, disabled workers, spouses and children. The surpluses also helped mask the size of the budget deficit being generated by the rest of the federal government.
Those days are over.
Since 2010, Social Security has been paying out more in benefits than it collects in taxes, adding to the urgency for Congress to address the program’s long-term finances.
“To me, urgent doesn’t begin to describe it,” said Chuck Blahous, one of the public trustees who oversee Social Security. “I would say we’re somewhere between critical and too late to deal with it.”
The Social Security trustees project the surplus will be gone in 2033. Unless Congress acts, Social Security would only collect enough tax revenue each year to pay about 75 percent of benefits, triggering an automatic reduction.
Whether you are 25 or 75 this inaction should worry you and make you mad. The longer politicians ignore the problem the worse it gets and the more difficult and expensive (and painful) it becomes to fix it.
Related articles
- Social Security surplus won’t last – Newsday (newsday.com)
- Social Security surplus dwarfed by future deficit (conservativeread.com)
QUINNSCOMMENTARY 