The future of the social security program is worse than you think.


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The future of the social security program is worse than you think.

For the first time in more than a quarter-century, Social Security ran a deficit in 2010: It spent $49 billion dollars more in benefits than it received in revenues, and drew from its trust funds to cover the shortfall. Those funds — a $2.7 trillion buffer built in anticipation of retiring baby boomers — will be exhausted by 2033, the government currently projects.

And this is from the New York Times, of all places! Of course, as soon as any politician suggests instituting any of the reforms suggested in the article the Times will then start screaming bloody murder in protest. They are very good at appearing nuanced and thoughtful about the debt, until someone actually suggests doing something about it.

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2 comments

  • Garry

    If 2010 was bad, what happened the next 2 years, when employee contributions dropped from 7.65% of wages to 5.65% (making total employer/employee contributions drop from 15.3% to 13.3%)? Interestingly, when I went to ssa.gov to confirm this, their tables ran only through 2010. Of course, these lower rates mean that people who contributed these years will draw less than they would have if rates had remained unchanged, but the balance sheets for 2011 and 2012 must be very ugly.

    And of course the “trust funds” don’t really exist.

  • To expand on Garry’s point about the so-called ‘trust funds’ (or ‘lockbox’ in Hillary-speak), there are a couple of points most people are unaware of: 1) the Federal government is authorized to collect SS taxes, but isn’t obligated to disburse the money, and 2) money collected from current workers doesn’t go to future benefits, but to service the debt incurred by past generations’ benefits. When a 20 or 30-something says they deserve benefits because they paid into the system, they’re wrong. They’ve paid for their parent’s (or grandparent’s) benefits.

    When the crash comes, and it will; the laws of economics are immutable, there are going to be millions of angry people in the streets, and, unlike Europe, they’re going to be armed. I’m sure that this knowledge motivates more than a few politicians to keep ignoring the problem in the hopes that they can keep placating people with money we don’t have.

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