Social Security Trustees Report Shows Insolvency Sooner
March 23, 2005
Year of Inaction has Increased Programs Debt
March 23, 2005 – The Social Security and Medicare Trustees released their annual report on the future health of the nation’s elderly entitlement programs today, and their findings were chilling. According to a review of the report’s findings by Trustee and NCPA Senior Fellow Thomas R. Saving, Social Security will start paying more in benefits than it collects in taxes in 2017, one year earlier than estimated in last year’s report.
In addition, the total unfunded liability of the program has increased by about $600 billion, up from $10.4 to $11.1 trillion.
“Social Security’s future has gotten worse and each year we delay reform adds to the cost we are pushing off onto our children,” said NCPA President John C. Goodman.
“While the date at which the Trust Fund is exhausted has moved up 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 these transfers are already happening.”
According to Saving:
- Today: T he federal government will have to use 3.4 percent of general revenue to pay the combined benefits for Social Security and all of Medicare. That’s in addition to the payroll tax dollars already collected for these programs.
- By 2020, Social Security and Medicare’s funding shortfalls will equal about 29 percent of all federal income dollars.
- By 2041, the year the Social Security Trust Fund no longer contains any obligation bonds, the two programs will require 66 percent of all federal income tax dollars.
- By 2080, the two programs will require more than (113 percent) the government is scheduled to collect in federal income taxes.
”The choices for saving both systems are going to be tough,” said Goodman, “but they only get tougher the longer we wait, and they pale in comparison to the future if we do nothing.”