By John McClaughry
The Social Security pension system is currently projected to pay benefits that exceed its income in 2021 for the first time in nearly 40 years. The fund will stay solvent until 2035 by paying out its accumulated reserves. Then there will be an automatic 24% reduction in benefits unless Congress steps in to shore up the program. But officials said the depletion date could be earlier than 2035 if employment levels, and thus payroll tax revenues, suffer a significant or sustained drop from the pandemic.
The only good news is that the disability fund will run out in 2065, 13 years later than projected in last year’s report, due to a continued decline in new disabled-worker applications and lower-than-expected disability incidence rates.
Taken together, the two programs would only be able to pay 79% of scheduled benefits after the trust funds are depleted in 2035.
A new analysis from the Bipartisan Policy Center, a centrist Washington think tank, suggested that the economic fallout from the pandemic — if similar to the 2007-09 recession — could deplete the retirement program’s trust fund by about 2028, and deplete the disability program by about 2024.
The report also said Medicare’s hospital insurance fund would be depleted in 2026, unchanged from last year’s report, as program costs continue to exceed the trust fund’s income. But it noted that depletion could occur as early as 2023 in an adverse scenario of lower-than-expected revenues and higher-than-expected costs.
This news will surely make everyone over 50 nervous — on top of the pandemic.
John McClaughry is vice president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.
Some solutions. Raise retirement age by a year or two. MAke it so if you are worth over $50 million (or have over $500,000 in annual income retired), you lose your SS….you don;t need it and your life is not affected much by not getting it. Does Bill Gates or Warren Buffett need it? But ulimate solution is to put in a 0.5% national sales tax…exempting things like clothes, medicine and food. To aid poorer folks, give families making less than $55,000 a $500 tax credit to cover taxes they pay. A 0.5% national sales tax would not be felt by most of us, slowly paid in iver time but would make SS and Medicare solvent! I hate more taxes….best to do them small if you have to, and spread out widely.
Seems your thinking is for the FAIR TAX. A lot of info on the ‘Net to evaluate. NO VAT and get rid of the Income Tax and layoff those agents, many of whom are nonhuman, believe me I know.
This might also make the VT Tax Dept more human as well.
This is nothing new and as long as SS is the third rail in politics, nothing will change and ALL tax payers will have to anti up. While the increase in the age for eligibility has helped some, how about making receiving SS income sensitive? There could be a sliding scale to determine if and how much an individual was able to receive. Then, the masses would continue to receive benefits relieving pressure at the ballot box. Just a thought.
It simply doesn’t matter. The US has a fiat currency: it isn’t backed by anything. It can therefore print as much money as it wants and it owes no one. This is exactly the same as if you or I owned the only printing press in town: we could print all the money we wanted and we wouldn’t have to pay anyone back for this fiat money, created out of thin air.
That’s the plain fact. But, this should scare us even more than the supposed “running out of money,” because what it means is that the government could support us all on a universal income if it wanted to: it could keep some version of lockdown going forever. So long as there were enough goods produced so that too much money wasn’t chasing too few goods, inflation wouldn’t be a problem.
Something to think about.
Whether or not you believe this main tenet of MMT matters not: a lot of people do believe it. And as a matter of practice, it’s true.
You can all thank the Liberal Democrat President, Lyndon B. Johnson (LBJ) for robbing the SSI lockbox and putting those monies into the general fund, which the Democrats eagerly spent on special interests. Vote Democrat/Progressive at your own demise…
It’s not hemorrhaging from people that were in the military. I have my W2 from my Air Force days in the early ’60’s. Made about $1100 for the year and then had to pay $250 income tax. And then they also took out FICA. That left about $750 net income for the year. Ya had room and board (lousy chow) and 24 hour ground alert duty. One perk was being on flying status on B-52’s, flew airborne alert with nukes for up to 24 hours at a time. Got a whopping $55 for that once a month. At least they gave me a flight lunch and no bed to lay on for the 24 hours. Also bought my special uniforms and shoes to jump into for the alert duty to man the planes.
Had to send my Income Tax to Burlington at that time. Sent a message with the check “seeing I’m paying for my salary, how about a raise”. No response.
For that when eligible for SS at 62, I was “given” $24 per month to make up for the military time. Am paying for Medicare Part A & B (which I paid fir all my working years) and they are taking out $1200 per year from SS. Was advised by people in the VA medical system to get Medicare, so did. When I go to the VA for checkups, I have to pay out of pocket for the visit and the last time it cost me $252. They don’t invoice Medicare. Also was suppose to get travel reimbursement (being over 40 miles away, am 62 miles OW). The VA stopped that travel money. The medical people are fine, it’s the bureaucrats in the VA system that stinks and controls the Vet. Vets have died because of them. Have many records.
So when are the liberals going to make the rich fill up the pot? — that is their solution for everything.