Social Security Insolvency and the Effects of Lawmaker Procrastination - KOIN.com; Bipartisan Policy Center
Social Security’s financial plight is quickly becoming a source of widespread media conjecture, and analysis from sources well-tuned to the program’s nuances makes it increasingly clear that a crisis is ahead for a large portion of America’s senior population. What’s fascinating about this recent focus on Social Security’s dire situation is that this is not a new problem. A quick look back to the beginning of this century confirms that the insolvency issue was expected 25 years ago.
The conclusion section of the 2001 Social Security Trustees Report ended with this: “The trust fund deficits projected for the longer run should be addressed in a timely way to allow for a gradual phasing in of any necessary changes and to provide advance notice so that workers can adjust their plans to take account of those changes. The sooner adjustments are made, the smaller and less abrupt they will have to be. With informed public discussion and timely legislative action, Social Security will continue to play a critical role in the lives of virtually every American.” (emphasis added)
Similar warnings were issued in succeeding Trustees’ Reports, and the most recent edition doesn’t mince words: “The OASI Trust Fund is projected to have sufficient reserves to pay full benefits on time until 2032.” Despite annual calls for legislative action, corrective measures to address the long-term trajectory have been absent, and insolvency is now within a six-year window.
The Cost of Procrastination
“Delaying action won’t just leave policymakers with fewer options — it will also make the necessary changes more severe.” That’s the observation from an article by NewsNations’ Business Reporter Andrew Dorn posted on koin.com (click here to read). Dorn examines the consequences of legislative inaction, from the elimination of previously viable reform options to the reduced value of others, and cites the inability to phase in changes over a longer period and the lack of adjustment time available to those affected. It’s a chilling summary of where “kicking the can down the road” has brought this venerable senior support program.
While Dorn’s comments are on the mark, it’s reasonable to add that the six-year (and steadily shrinking) window for insolvency has also created a situation where, even if policy actions are implemented, some form of temporary or interim financing will likely be needed until financial relief kicks in. This matter was discussed in a recent Senate Committee on Finance Subcommittee on Social Security, Pensions, and Family Policy by Bipartisan Policy Center vice president of economic policy Shai Akabas (see item posted yesterday here).