That Social Security Trustees’ Report
So, what’s more important, a cash-flow problem that is likely to occur in 12 years or a insolvency problem that will happen in 37 years?
If you’re AP, you talk about the latter, more distant problem first (4th and 5th paragraphs in story):
The Social Security trust fund will exhaust its assets in 2041 instead of 2042 as forecast last year….
Social Security outlays would outstrip tax income in 2017 instead of 2018 as previously forecast, the report said.
Those who think nothing needs to be done to address Social Security’s problems, or even that we can afford to dither for a few more years, need to realize that in 12 years, when benefits exceed collections, something will have to done. Because the “Trust Fund” only has government bonds in it, not some mythical stash of cash, the choices then, in 2017, will be:
- - raise taxes
- - cut benefits
- - borrow money
By that time, it will be way too late to even consider private accounts.
Or, something can be done in this Congressional session. Those who are saying “we won’t talk about solutions until the idea of private accounts are taken off the table” are really saying “we want to run out the clock until we get to the point where the current system is the only choice.”
Trouble is, the current system is not sustainable without dramatic increases in the retirement age (remember when Alan Greenspan proposed continually raising the Social Security retirement age for full benefits?), equally dramatic cuts in benefits, or economy-stifling tax increases (see: Germany, France).
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UPDATE 1: Interesting headline comparisons (on of course the SAME news):
- - Reuters (on Yahoo Finance): “Social Security Outlook Unchanged-Trustees”
- - Marketwatch.com (link requires registration after 24 hours): “Social Security Outlook Worsens Slightly”
- - USA Today: “Report Paints Tough Future for Social Security, Medicare”
- - Forbes.com (home page as of 6:15 pm): “Social Security to Go Broke Earlier”
UPDATE 2 (suppressing giggles): Kevin Drum with a little help from another graphically challenged blogger, says not to worry, the outlook is improved–for 2080, because the projected ANNUAL shortfall then will “only” be 5.75% of all payroll vs. the 6% projected in last year’s report. Zheesh. You guys do realize that anything below 0% is negative (a shortfall, a deficit, a black hole because it gets worse and worse in every year on the graph), right? Y’all sure you didn’t run some long-gone Internet start-ups in the late 90s?
UPDATE 3: Kiplinger has a nice balanced overview of the key features and issues of Social Security here. Money quote: “Eventually, someone must touch the third rail, or the entire social security train will come to a screeching halt.” Ya hear that, Kevin?
