Social Security in Worse Health Than News Suggests
March 20, 2003
Trustee Saving Says Social Security/Medicare Will Start Draining Other Funds in 5 Years
WASHINGTON, DC (March 20, 2003) -- Contrary to news reports that the 2003 Social Security and Medicare Trustees report pronounced Social Security in better health than last year, Thomas R. Saving, one of the report's authors, said today "the prospects for the two programs together have deteriorated significantly since just last year."
Saving, who is the director of the Private Enterprise Research Center (PERC) at Texas A&M University and is a senior fellow with the National Center for Policy Analysis (NCPA) said the disconnect between the actual fiscal health of the two programs and news reports results from a misunderstanding of their future funding.
"While the date at which the Trust Fund is exhausted has been pushed back one year, this matters little from a total budget perspective," said Saving. "Any redemption of the assets in these programs' Trust Funds will require resources from somewhere else in the federal budget. And this transfer will begin within just five years."
Saving noted that the funding drain will being soon and will accelerate rapidly. For example:
- Today: Funds collected for Social Security and Medicare Part A and B are in excess to what is needed to provide benefits. This surplus is equal 2 percent of all federal income tax collections.
- 2008: The date when program dedicated revenues will no longer be sufficient and general revenue transfers will be needed to meet the programs' obligations.
- 2013: 5 percent of all federal income tax receipts will be needed to maintain promised benefits.
- 2040: Two years before the "Social Security Trust Fund" is exhausted under current estimates, these programs will require 47 percent, or nearly half, of all federal income tax receipts.