The trouble with Social Security
Associated Press (via ABC News):
Democrats have resisted President Bush's proposed changes to Social Security, arguing its problems are far off. The program's top analyst says they're flat wrong.Stephen Goss, the nonpartisan chief actuary of the Social Security Administration, says the nation will face a pinch in 2009 when excess payroll taxes that have been flowing into the program start to decline, halting the growth of surplus money that Congress has been tapping to fund other government programs.
It's a warning that Bush is counseling fellow Republicans to heed if they want to avoid blowback from voters.
Democrats say we face no crisis because Social Security's trust fund will keep the program solvent until 2041. But the trust fund holds only IOUs; Congress uses the Social Security surplus to pay on the Government's other obligations. What happens when the surplus dries up?
Lawmakers would likely have to decide between budget cuts or tax increases that will only grow more severe each year until 2017 ...
Beginning in 2018, only thirteen years from now, Social Security will have no surplus; worse, it will begin to pay out more in benefits than it collects in taxes. That will necessitate still more spending cuts, tax increases or borrowing:
"While there is no question that these securities will be redeemed when needed, as is now the case with the Medicare Trust Fund, this redemption will require the federal government to increase taxes, lower expenditures or issue publicly held debt in amounts equal to the net redemptions by the trust funds," Goss told the House Way and Means Social Security subcommittee on Tuesday.
As Ruben Navarrette Jr. puts it:
Unless something is done, the current system will -- 10 or 20 years from now -- soak taxpayers with tax rates that experts say could easily top 50 percent when you combine income taxes with the payroll taxes necessary to fund Social Security and Medicare.
Blinded by nostalgia, the elderly, Mr. Navarrette writes, just don't get it. But the rest of us need to get it -- and soon.