Social Security in Worse Shape than Thought

Liberals love to claim that Social Security did not cause our current federal deficit situation. While technically-correct in the past, that situation is about to change quickly and for the worse.

According to the Mercatus Center at George Mason University:

Social Security will pay out more than it takes in this year, sending out $41 billion more in benefits than it will collect. This is the first time since 1983 that benefit payouts have outstripped collections, and according to CBO data, the finances of the Social Security system are deteriorating more rapidly than even the CBO expected.

Using CBO’s last three long-term projections for Social Security, the above chart graphs the decline. CBO uses the percentage of taxable payroll left to Social Security at year’s end as the bases for its projections. The percentage of taxable payroll is an estimate of earnings subject to the payroll tax. When the percentage becomes negative, Social Security is paying out more in benefits than it collects in payroll taxes in a given year.

So, Social Security is now causing the federal deficit to increase. It is time for reform. Preferably along the lines of this idea.

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3 Replies to “Social Security in Worse Shape than Thought”

  1. All CBO projections make assumptions. So what happened that changed:

    1) High unemployment resulting in less payroll tax collections
    2) Applications for Social Security benefits surged as eligible workers applied for early retirement or disability. Many of these were discouraged workers who gave up on finding employment
    3) Baby-boomers are retiring in increasing numbers

    In 1983 changes were made to the Social Security system to help insure its health. In 1983 90% of income was subject to payroll tax collections. That number has fallen to 86%. This gap has never been addressed as it should have been years ago when it started falling. It simply means the cap needs to be raised to capture more payroll taxes.

    “Liberals love to claim that Social Security did not cause our current federal deficit situation.” And conservatives believe “deficits don’t matter”. Remember it was Cheney who said “Reagan proved deficits don’t matter”. Deficits under Republican administrations: Reagan ($1.6T); Bush I ($1.5T); Bush II ($4.9T) = $8 trillion total. Total national debt is $13.7 trillion. Deficits do matter.

  2. That plan from the Cato Institute is very well thought out. Giving people the retirement side (half) of payroll taxes an opt out option seems the most fair way to handle this moving forward. I would much rather invest my own SS in gold and silver IRA’s right now than have it spent by the bureaucrats.

    The leadership on both sides of the aisle have screwed the pooch (the pooch being we the people). Until they come around to serving the people again, I want as little of my money in their hands as possible. This seems like a great way to accomplish this while ensuring I have ANY money waiting for me at the end of my 40+ year contribution to society.

    Let’s make it happen people.

  3. You can thank LBJ for the shape the Social Security is in now. He opened up this program to allow congress to raid it. If the bums would keep their hands out of it and pay bak what they have “stolen” it would be in good shape.

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