NCPA - National Center for Policy Analysis


March 25, 2005

The most important figure in this week's Social Security and Medicare Trustees' report is $2.2 trillion, which is the difference between the current size of the Social Security "Trust Fund" ($1.7 trillion) and what it will grow to become over merely a decade through 2014 ($3.9 trillion), says the Wall Street Journal.

  • More precisely, that is the amount of payroll tax revenue that workers will pay between now and 2014 that exceeds what will be spent over that same period on retiree benefits.
  • The Trustees predict the payroll tax will continue to exceed benefits through 2017, but their report breaks out the numbers in detail only through 2014.

And what will happen to that surplus cash during these next 10 years? According to the Journal:

  • Every dime of it will be spent by politicians on current government.
  • Not a nickel will be saved; nothing will be invested in accounts with anyone's name on it.
  • Instead of building assets, or contributing to an increase in net national saving and thus investment, all of it will finance current government consumption.

The reform debate so far has too often detoured into the cul-de-sac of "transition costs" and IOUs and what's going to happen in 2041 when the Trust Fund itself is empty. The far more urgent issue is how to capture today's surplus payroll tax revenue and put it to more productive use. If Social Security reform means anything, it ought to mean recapturing some or all of that money, says the Journal.

Letting individuals keep and invest this excess payroll tax money, which they've earned, is the nub of the entire Social Security debate. And we suspect it's the only argument that reformers have that will trump the scare tactics and accounting obfuscation of opponents, says the Journal.

Source: Editorial, "$2.2 Trillion Down," Wall Street Journal, March 25, 2005.

For text (registration required):,,SB111171810501889530,00.html

For Trustee's report:


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