Wendy from Boots and Sabers has fired the first Social Security-related salvo at FDR’s grandson’s and AARP’s claim Social Security is “solvent”. The analysis:
I admire Mr. Roosevelt’s family loyalty, but this graph from the very first page of the Congressional Budget Office’s “Long-Term Projections for Social Security: 2009 Update” debunks Roosevelt’s claim.
If the AARP study claims that the Social Security Trust Fund could pay UP TO 78% of benefits, it ain’t “sound.” “Sound” would be 100%, don’t you think?
Rating:
I could add to that by noting things got even worse since the 2009 CBO report, with the Old-Age and Survivors Insurance portion (the main part of SocSecurity) running primary (cash) deficits now, or that the Disability Insurance “Trust Fund”, which is now in the final stage of collapse as both tax revenues and interest are not enough to cover the costs, will be fully-exhausted well before 2020. Oh wait; I have been.
[…] over at No Runny Eggs adds this tidbit. Things got even worse since the 2009 CBO report, with the Old-Age and Survivors Insurance portion […]
“If the AARP study claims that the Social Security Trust Fund could pay UP TO 78% of benefits, it ain’t ‘sound.'”
…In 2043. If nothing is done between now and then.
It’s actually 2040 for the OASI portion and 2018 for the DI portion, at least according to the “intermediate case” in the 2010 Social Security Trustees report. I haven’t fully-analyzed that yet (mostly because the main part of the “gain”, an assumption that a significant portion of compensation that currently goes toward health insurance will instead go to wages, is a bunch of bullshit), so I’ll go back to the 2009 numbers, which had OASI running out of money in 2039 and DI running out in 2020.
What you, and the AARP, fail to take into account is nearly $9 trillion in nominal dollars (or if you prefer, over $5 trillion in constant 2010 dollars) will need to be monetized by the federal government just to get each of the two halves of Social Security to their nominal “Trust Fund” drop-dead dates. The funny (as in scary-clown “funny”) thing is, there isn’t dollar one to do that, just a promise to do it.
One more thing; the OASI part of Social Security no longer is taking in as much in taxes as it is paying out on an annual basis.
“I admire Mr. Roosevelt’s family loyalty, but this graph from the very first page of the Congressional Budget Office’s “Long-Term Projections for Social Security: 2009 Update” debunks Roosevelt’s claim.”
What? That Social Security outlays are scheduled to go from 5% of GDP to a whopping………6% in 60 years?
That would be from 4.84% of GDP this year to 5.90% of GDP in 2070. Need I remind you that an increase in terms of GDP is by definition above and beyond the effects of inflation, and indeed, above the effects of wage growth?