Today’s CBO report has some bad news about the deficit. But CBO has some really, really bad news about Social Security: It’s officially broke.
The CBO’s revenue/expenditure estimates now place the program in permanent deficit. There had been some hope that payroll taxes would recover sufficiently post-recession to put the program back into the black (the theoretical black) for at least a few more years, putting off the day of reckoning for an election cycle or more. No more: The new CBO estimates put Social Security in the red for as far as the eye can see.
But there’s a bit of camouflage attached: If you include the “interest” that the federal government “owes” the fictitious Social Security “trust fund,” then the program is in the black. Which is to say, if you think that borrowing another $1 trillion from the bond market to shift money from one government account to another government account makes the nation $1 trillion richer, then everything’s hunky-dory. But if you compare the program’s tax income to its benefit outlays, without the “interest” owed, as CBO does, what you get is deficits from this year forward to 2021 of $45 billion, $30 billion, $28 billion, $30 billion, $31 billion, $33 billion, $44 billion, $59 billion, $77 billion, $98 billion, and $118 billion — by my always-suspect English-major math, about six-tenths of a trillion dollars in the hole.
President Obama has explicitly rejected the recommendations of his own bipartisan deficit panel, specifically the proposal to raise the Social Security retirement age modestly over the course of several decades (to 69 by 2075). But we can only put so many trillions on the national balance sheet before our national chit gets called in, at which point it will hit the fiscal fan.
— Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, just published by Regnery. You can buy an autographed copy through National Review Online here.
The "camouflage" is easily stripped.
Social security tax collections are no longer sufficient to pay monthly benefits to social security recipients, the difference must be made up by general treasury borrowing, that is, by federal borrowing. There is no end to this condition under the current system.
Reply to this commentLinkReport AbuseAnd when I call for us to get rid of it (except for those that are now relying on it or will be relying on it in the near future), I'm called heartless.
The thing is a BUST. I don't want anymore of my money going into that blackhole.
Reply to this commentLinkReport AbuseI love how you tagged this post "despair." Ha! Sad, but funny.
Reply to this commentLinkReport AbuseThis year's 2% cut in the payroll tax isn't helping. A poor start on fiscal responsibility by the new Congress.
Reply to this commentLinkReport Abuseahh Gersen ... the 2% cut was from the last Congress ... the one run by the Dems ...
Is it that hard to stick to facts ?
Reply to this commentLinkReport AbuseI fully agree with Leveut!
Reply to this commentLinkReport AbuseFor those who argue against excluding the interest payable, here's a solution guaranteed to keep the trust-fund forever in the black:
Reply to this commentLinkReport AbuseJust index interest payable to the cash-flow deficit -- no need for benefit cuts nor tax hikes; problem solved!
I agree fully with Leveut!
Reply to this commentLinkReport AbuseUnless I am missing it in the link in the first line, can we get a link to the source data for this post. I can't link NRO posts as proof to my liberal friends/drones who will dismiss anything said by a conservative voice as propaganda.
Reply to this commentLinkReport AbuseBroccoli:
I don't have a link handy, but the document is CBO's "The Budget and Economic Outlook: Fiscal Years 2011 to 2021."
Reply to this commentLinkReport AbuseIt was after the election - part of the price to extend income tax rates. Repubs didn't put up much fuss about it. I understand why, for political reasons, they didn't/couldn't. But it's depressing that the one step on entitlements since the election has been to put the easiest one to fix even further in the red.
Reply to this commentLinkReport AbuseTwo things need to be done pretty much right away. One, raise the retirement age fairly quickly to 69-70. People are living longer and the typical job isn't backbreaking labor so there's no reason to retire with 15-20 years of relative health on the taxpayers dime.
Second, and many conservatives may not like this part, but eliminate the cap on income for SS taxes. The argument that a high earner will not see increased benefits with that increased contribution rings hollow when the typical earner under 50 probably won't see any benefits at all either unless the system is restructured. If it takes eliminating the cap to raise the retirement age is has to be done.
Ten years ago I would have said replace SS with individual retirement accounts and eat the temporary budget hit as near seniors retire but we can't afford that anymore. We have to fix SS before it can be fundamentally changed.
Reply to this commentLinkReport AbuseThe reason I like the basic Ryan approach -- leave current and near-retirement payments alone -- is a matter of prudence. Ponzi schemes are hard to end... this method is most likely to become law that would end the SS theft machine.
The SS recipients who benefited most from the pyramid are either quite old or quite dead. They're the folks who got the sweet deal. As much as I love Baby Boomer bashing, the Boomers retiring today aren't getting much of a return on their SS taxes (and are already having their retirement age increased each year).
Reply to this commentLinkReport Abuse_The USA and FDR is so smarts....
See when the Ponzi goes busts here, we will have a bunch of seasoned citizens rioting. Not much a mob of 75 year olds can destroy.
Now Europe did it all wrong, they have 22 to 35 year olds rioting. Everyone knows that is bad. The youth have much more vigor.
Reply to this commentLinkReport AbuseThe Social Security cut was 2% in my paycheck, but in reality it factors out to a 15% reduction in funding for this year.... That is ridiculous!
Reply to this commentLinkReport AbuseThis got swept under the rug by both Republicans and Democrats. Irresponsible! Cut the spending, then cut the taxes.
.300Winchester -- Why do you think old folks in either the US or EU would bother rioting? As you they can vote themselves condos, villas, and RVs -- and the police/army keeps the rioters at bay -- they're content.
You're right, though...it will end badly if we don't the right things now.
That "bad end" is why I'm willing to take a haircut now (I'm 49) to end the pyramid. I don't want to be pushed onto an ice floe when I'm 75 and geezing!
Reply to this commentLinkReport AbuseJonahsFricosis -
I wouldn't worry about that ice floe... I'm a year younger than you, and our Golden Years will end either in Soylent Green or a hopeless attempt to "renew" (Logan's Run)...
Reply to this commentLinkReport Abuse_Jonah'sFricosisGuy,
Don't sweat the ice flow. The death pannel won't give you your meds because you are too old way before you get to that point.
There is alot of expense getting the gezers onto the ice, cutting back medication is much cheaper.
Reply to this commentLinkReport AbuseI'm so glad that I dodged the draft, back in the Vietnam era. Farsighted person that I am, I realized that the USA would eventually renege on its promises. I was right.
Meanwhile, former South Vietnamese refugees operate doughnut and sandwich shops here, even as the ones left behind are working in tech factories capitalized by US interests.
Social Security? That worked for the "greatest generation," meaning the ones greatest at getting government handouts in retirement.
Reply to this commentLinkReport Abusedmt117 and .300Winchester -- Thanks for the reminder re: Obamacare. What a bad deal, I'll lose my meds AND be served as Soylent Green.
Nice two-fer for Obamacare: ruining both the health care and food industries!
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