Social Security Fund to Run Out in '35

Social Security Fund to Run Out in '35

Brian Faler
Bloomberg
April 23, 2012

The Social Security program will exhaust its trust fund in 2035 and have to start reducing benefits to senior citizens unless Congress intervenes, its trustees said.

That is three years sooner than projected in 2011 for the retirement benefits program, which serves 44 million people, the trustees said in an annual report today. Social Security’s disability program, which aids 11 million Americans, will run through its trust fund in 2016, two years earlier than predicted. The report attributed the fiscal stress in part to the weak economy.

The combined Social Security trust funds would be depleted in 2033, three years earlier than projected. The main trust fund that supports the Medicare health-care program for the elderly will run dry in 2024, the report said.

The giant retirement programs are straining the U.S. government’s finances, and what to do about them is a central issue in the election-year debate between Democrats and Republicans as President Barack Obama seeks a second term.

“Millions of Americans rely on Social Security and Medicare for income and for health care, and millions more will do so in the future,” Treasury Secretary Timothy Geithner, one of the programs’ six trustees, said today. “These programs have the resources they need to fulfill their commitments to the American people for years to come. But what these reports also reinforce is that we must take steps to keep these programs whole for the future.”

Program’s Finances

House Republicans propose replacing Medicare with government subsidies to help seniors buy private insurance. Democrats and the Obama administration rejected that plan and have said they want to find ways to shore up the traditional program. Neither side has offered a plan for Social Security, which at a 2011 cost of $736 billion is the U.S. government’s largest single program.

Republican presidential candidate Mitt Romney proposes raising the Social Security retirement age for younger people and indexing benefit increases for higher-income retirees to inflation instead of wages. For Medicare, he endorsed the House Republicans’ plan.

The slow economy harms the programs because when unemployment rises, fewer Americans pay the payroll taxes that support Social Security and Medicare. At the same time, some people unable to find work apply for Social Security benefits earlier than they had planned, the trustees said.

Cost of Living

At the same time, the report said, a higher-than-expected 3.6 percent cost-of-living adjustment awarded last year to Social Security beneficiaries helped push up program costs.

In addition to Geithner, the trustees are the secretaries of Labor and Health and Human Services, the Social Security administrator and two public representatives.

Social Security has two parts: the old-age and survivors insurance program, which supports senior citizens, and the disability insurance program. Each has a trust fund financed primarily by a payroll tax that is split between workers and employers. Medicare is funded through a combination of payroll taxes, beneficiaries’ premiums and general tax revenue.

Congress cut the payroll tax for workers by 2 percentage points for 2011 and 2012 in an effort to stimulate the economy. The cost was added to the U.S. deficit.

The disability insurance program took in $106 billion last year, while spending $132 billion, according to the report. At the end of the year, it had $154 billion left in its trust fund.

“The DI program faces the most immediate financing shortfall of any of the separate trust funds,” the report said. “Thus lawmakers need to act soon to avoid reduced payments to DI beneficiaries four years from now.”

This problem has been looming for decades and nothing has been done to fix it, because to do so is political suicide. The Democrat Party has played class warfare for 75 fucking years. They're a party that believes a "tax the rich" idea that brings in $47 billion in new tax money while the federal gov't creates $7 trillion in new debt in a 10 year period is a great idea. The Democrat party has created 4 of the top 5 spending programs of our yearly federal budget. In 75 years, the Dems have known only two things----> tax, tax, tax, spend, spend, spend! That's it! The problem is that way too many Americans are dumb enough to fall for for their bullshit. Anyone who believes that a group of people (Top 10%) who pay 68% of the federal taxes isn't paying enough, are just plain being greedy and foolish themselves. Or I should say being a typical liberal or Democrat?

Abolish Social Security and let me to pay a lower rate to support the chumps who already depend on it. I'm never going to see any of the benefits anyways.

Oh..... in 2035, I'll be 72 yrs old. That's if I live that long. Two scenarios here;

One, the retirement age will definitely be raised in the coming years... probably to age 70. So, I get to start collecting in 2033. Two year later (if nothing is done), I'll be shit out of luck. All the money I paid into this ponzi scheme will be gone.

Two, if I croak before age 70, all the money I paid into this ponzi scheme will be gone... sucked up by the gov't to pay someone else their SS bennies.

Either way, I lose.