April 5, 2008


Many Say Social Security Is Healthy Enough: Some experts disagree with the treasury secretary's grim assessment of the government benefits fund (Bret Schulte, April 4, 2008, US News)

Last year, Social Security brought in $200 billion more than it spent, and the trust fund surplus is projected to hold out until 2017, when the government must start paying back what it borrowed from the fund. By 2041, Social Security will be able to pay out 78 percent of benefits promised to retirees. That's not good, but it's not that bad, either. "Social Security is in good shape," argues Barbara Kennelly, president of the National Committee to Preserve Social Security and Medicare. "We got a good healthy surplus until 2017, and it's not like everybody drops dead. People continue to pay into the fund."

The tweaks needed to keep the current system are so minor that talk of a crisis is mere hysteria.

Posted by Orrin Judd at April 5, 2008 6:11 AM

But there's no trust fund. We'll reach 2017 and we'll have to cut spending, raise the age for receiving benefits, or raise taxes. It's not like we have a pile of money sitting around and we run out in 2042. The system starts running out of money a lot sooner than that.

The tweak we really need is personal decision-making and private accounts, so that if the system is going to run out of money to fully pay its obligations then at least we've been allowed to keep some of that money for our own investment to make up the difference.

Posted by: Matt Murphy at April 5, 2008 7:24 AM

So is the $200B sitting in a big pile for the SS administrators to roll around in, or did the Federal Government spend every last penny of it? That will tell you the health of the SS trust fund.

That money should have been left in private hands to help fuel the growth of the economy.

Posted by: Pete at April 5, 2008 9:48 AM

The lockbox is empty. And the check to fill it is not in the mail.

There are three key dates - when the cash flow hits an inflection point (perhaps 2011, perhaps 2013), when the "trust fund" starts to drain (2017), and when the imaginary money in said imaginary fund is gone (sooner than anyone has projected, perhaps 2022, perhaps 2025). And I have to laugh at all those who say that 78% of what is currently promised is 'not bad'.

How would you like to take a 22% pay cut, just because your boss can't manage his money, and have to pay higher taxes on what you still earn? Not me. Of course, the 'crisis' will hit long before 2041, because 78% is just an arbitrary number, no?

And Medicare remains in the middle of the room, heading for a much bigger 'crisis', much sooner.

Posted by: ratbert at April 5, 2008 1:01 PM