March 9, 2005
For years, the government has collected more in Social Security taxes than it needed to pay current benefits. Those excess collections are credited to the Social Security Trust Fund, ostensibly to pay future retirees. But there is no actual money in the fund. Instead, the government spends the money for other purposes and issues the fund IOUs.
Washington, through profligate borrowing and policies that lock in red ink for years to come, is passing the burden to future generations, say observers. And the problem is getting worse:
- The money that has been borrowed, or is projected to be borrowed, in President Bush's two terms alone would come close to solving Social Security's solvency problems for at least the next 75 years.
- The Office of Management and Budget projects cumulative borrowing of $2.6 trillion.
- The Social Security Administration estimates that $3.7 trillion would shore up the program until at least 2080.
As bad as the current record deficits look ($427 billion this year alone), they likely will get worse in the next decade as the result of fiscal time bombs hard-wired into government spending and tax plans:
- Exploding Medicare and Medicaid costs, the loss of revenue because of the recent tax cuts and likely changes in the alternative minimum tax (AMT) present a bleak outlook over the next 10 years.
- Making the Bush tax cuts permanent and fixing the AMT could lead to deficits of about $650 billion to $750 billion by the middle of the next decade; borrowing money to create personal accounts only worsens the deficit picture.
Private accounts are only one of many necessary steps to put the nation on a sound fiscal footing and ensure that future generations will have a reasonably comfortable retirement, say observers.
Source: Editorial, "Crisis? Not in Social Security. Deficits drive the problem: Washington raids trust fund, threatening future generations," USA Today, March 8, 2005.
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