Your Opinion: Social Security is not solvent
Monday, May 6, 2013
I read an interesting letter in the April 28 News Tribune. The letter writer stated in part, “That’s the plan for health care from today’s GOP. Couple that with vouchers for Medicare and a raid of perfectly solvent Social Security.” What?
Is this letter writer serious or just doesn’t know what they are talking about? SSA is not “perfectly solvent” by any sane observation of the facts.
According to Webster’s, solvent means: “able to pay all legal debts.”
All of the FICA tax withheld from workers paychecks doesn’t get deposited into a separate account, to be used only for SSA recipients.
It gets combined with all other federal revenues for dispersing to whatever the government spends money on. As long as the SSA continues to have approximately $2.6 trillion in U.S. treasuries, I guess that is what this individual is talking about.
With the federal government borrowing 30 percent of what they are spending each year, to the tune of $1.2 trillion borrowed per year, how can one say that SSA is “perfectly solvent”? In just a few short years the amount of income from FICA tax will not be enough to cover the outflow to SS recipients.
According to an article in the USA Today, “Social Security’s long-term shortfall grows about $1.2 trillion annually, a sign of an imbalance between the number of young workers and older beneficiaries, according to the Social Security trustees’ annual reports.
The $21.4 trillion unfunded liability represents the difference between all taxes that will be paid and all benefits received over the lifetimes of everyone in the system now, workers and beneficiaries alike. This is the measure corporations and insurance companies use to assess financial adequacy of their retirement programs.”
Congress reduces its estimate of Social Security’s shortfall by counting the $2.6 trillion in IOUs the government has issued to the program’s trust fund.
However, the government’s audited books, issued by the Treasury Department, don’t count that money as having any value to the federal government because it is a debt the government has issued to itself, like paying off a car loan with a credit card.
Social Security’s cost will soar more quickly than Medicare because its early retirement age is 62 rather than 65. Social Security’s cost will grow from $712 billion in 2010 to $911 billion in 2015 and $1.2 trillion in 2020, according to the program’s actuaries.
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