Looking at the Social Security Solvency Dilemma Realistically - American Action Forum
As you’ve likely read in a variety of news reports (including posts on this site), the Social Security Trustees Report issued last week offered what some quarters consider a bright spot in Social Security’s dismal financial landscape. The Trustees reset the projected depletion date for the program’s cash reserves back a year, from 2034 to 2035, and lowered the projection for post-depletion benefit cuts to 20% from 21%. While that’s better than moving the projections in the other direction, it certainly doesn’t mean that the long-term problem is improving. Indeed, this is not a self-correcting situation.
Douglas Holtz-Eakin, President of the American Action Forum, notes that the results conveyed in this year’s Trustees Report resulted from “…some unexpectedly strong economic growth (that) bought a bit of time before the red ink hits.” In a post on americanactionforum.org, he notes that Social Security is now operating in a deficit position, and cites estimates from a companion American Action Forum report by Gordon Gray and Jackson Hammond that suggest the need for a payroll tax increase of more than 3% (from 12.4% to 15.64%) to stave off the 20% benefit cut. Holtz-Eakin’s commentary, as well as the details presented by Gray and Hammond, also cite similar characteristics of the state that Medicare finds itself in with respect to insolvency.
Holtz-Eakin’s post, which you can access here, also traces the 21st Century’s lack of action on the looming insolvency issues facing Social Security and Medicare and the budgetary implications related to corrective action, closing with an admonition that “(a) lot of public education will be needed” to condition all participants involved in correcting the problems facing these massive senior benefit programs.
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