(H/T – Ed Morrissey)
Senate Majority Leader Harry Reid (D-NV) said that he won’t take a look at making Social Security solvent for at least 20 years. Ed has already done a fine job knocking holes in that statement, but I have a couple of wrecking balls to deliver as well. I’ll let Ed handle the set-up:
Why take action now, if the “solvency” of Social Security won’t be at issue until 2037? In the first place, that’s debatable in and of itself. The SSA has slipped into red ink on a monthly basis six years earlier than projected by Peter Orszag in 2008, when he ran the Congressional Budget Office, which means that the extended projections are certainly questionable. The “fund” has no cash on hand, either; it consists of Treasuries that SSA received so Congress could spend the money over the last few decades. When SSA starts cashing those Treasuries, as it has to do now to cover monthly deficits, the federal government has to sell more bonds to cover the cost.
Since Ed quotes extensively Charles Blahous, author of Social Security: The Unfinished Work, and Blahous used the 2009 Trustees Report for the basis of his book, I’ll use that as well. In combined terms, between 2011 and 2030, using the intermediate case scenario, the combined OASDI trust funds will spend $3,482 billion (or if you prefer, $3.48 trillion) more than they take in. Through 2036, the last full year of “solvency” for the combined funds, that figure jumps to $7,167 billion. As Ed notes, that’s money the Treasury will have to borrow, or at least try to borrow.
The bad news is the actuaries that put together that report “sort of” missed on the near-term predictions. Instead of the combined trust funds running a $37 billion cash surplus between 2009 and 2010, they ran a $45 billion cash deficit. If one adjusts the future predictions to reflect the past 2 years of poor performance, the “drop dead” date drops to 2029.
The ugly news is that there is no combined OASDI trust fund. The two parts of Social Security, the Old-Age and Survivors Insurance and Disability Insurance, are two separate entities, and the smaller Disability Insurance fund will reach exhaustion before the end of this decade. At that point, those on federal disability will be taking a significant cut in benefits, on the order of 15%-25%, because neither of the programs are currently authorized to borrow to meet costs.
