Social Security: Can’t We Wait Until 2037 to Solve That Problem?
Posted May 13th, 2009 at 1.22pm in Entitlements.
No. Heritage fellow David John explains:
Is the Important Year to Consider 2037, 2016, or 2009?
The year when Social Security begins to spend more than it takes in, 2016, is by far the most important year. From that point on, Social Security will require large and growing amounts of general revenue money in order to pay all of its promised benefits. Even though this money will technically come from cashing in the special issue bonds in the trust fund, the money to repay those bonds will come from other tax collections or borrowing. The billions that go to Social Security each year will make it harder to find money for other government programs or require large and growing tax increases.
A second important year is 2009–this year. Starting now, the annual Social Security surpluses that Congress has been borrowing and spending on other programs will begin to shrink. In fact, because the recession has both reduced Social Security payroll tax revenues and increased its benefit payments, Congress will have to either find other sources to replace the money that it borrows from Social Security or shrink spending. This year, the surplus will be only about $18 billion, and although it is predicted to grow slightly as the economy recovers, no longer can Social Security surpluses be used to mask the real size of the deficit and finance other spending.
Compared to these two dates, 2037–the year that the Social Security trust fund runs out of its special issue bonds–has little importance.