Social Security will pay out more this year than it gets in payroll taxes, marking the first time since the program will be in the red since it was overhauled in 1983, according to the annual authoritative report released Thursday by the program's actuary...No problem, you understand... The "improving economy" will rebalance the accounts...
The deficit will last through 2011, then an improving economy will put it back into balance for three years, then it will dip back into the red in 2015, the actuary said. The program has enough money in its trust fund to cover the annual deficit for two decades beyond that.
Addendum: cwt offers this alternate perspective in his comment: "Social security is designed to run a short term deficit. It was initially intended to be a pay as you go pension, with current year payroll taxes paying current year pensions. In the 80's, there was a scare about the larger than usual baby boom cohort and "zomg, Social Security is going to go bankrupt". Alan Greenspan (yes that Alan Greenspan) came up with the idea of raising the payroll tax, to generate a surplus, to create a "trust fund" which would pay the baby boom social security. This surplus, was then used borrowed against for current account spending, resulting in lower taxes for the wealthy, ostensibly to be paid back with higher taxes at a later time. When people say that SS is paying out more than it is taking in, it is really just starting to deplete this trust fund, as intended..."
If they removed the salary cap, it would soon be in the black.
ReplyDeleteSocial security is designed to run a short term deficit. It was initially intended to be a pay as you go pension, with current year payroll taxes paying current year pensions. In the 80's, there was a scare about the larger than usual baby boom cohort and "zomg, Social Security is going to go bankrupt". Alan Greenspan (yes that Alan Greenspan) came up with the idea of raising the payroll tax, to generate a surplus, to create a "trust fund" which would pay the baby boom social security. This surplus, was then used borrowed against for current account spending, resulting in lower taxes for the wealthy, ostensibly to be paid back with higher taxes at a later time. When people say that SS is paying out more than it is taking in, it is really just starting to deplete this trust fund, as intended. Really, the rich are trying to reneg on their end of the deal.
ReplyDeleteInteresting point. I've added it to the post. Thanx.
ReplyDelete