Social Security Will Go Broke in 2041

[FUZO]

TweetSocial Security Will Go Broke in 2041



WASHINGTON - A new report on the financial health of Social Security (news - web sites) changed the numbers only slightly and the terms of the political debate even less so.




The trustees who oversee the government retirement program said Wednesday that Social Security will begin paying out more in benefits than it receives in payroll taxes in 2017. That means the government at that point will have to increase its borrowing on financial markets, raise taxes or divert money from other government programs to sustain Social Security at current levels.

The trustees also estimated in their annual report that the program, which is about to be inundated with baby boom retirees, will go broke in 2041. That's the date, the trustees said, that the $1.6 trillion accumulated in trust accounts from excess payroll taxes over past decades — really just IOUs because the government already has spent the money on other things — will dwindle to zero from sending out monthly benefit checks.

While both the 2017 and 2041 estimates moved up by a year the dates that had been forecast previously, both sides in the current political debate over Social Security seized on the update with familiar arguments.

The Bush administration said the report underscored the urgency of its effort to overhaul Social Security this year, in part by creating retirement investment accounts for younger workers. Democrats said the report undercut the president's efforts to portray the program as in immediate crisis.

"The numbers leave nothing to doubt about the financial condition of the Social Security system," Treasury Secretary John Snow, chairman of the six-member trustees' board, said at a news conference shortly after the report was released. "The report underscores the fact that we need to do something."

The Club for Growth, a conservative think-tank, agreed. "It's just common sense to change the ship's course before it hits the iceberg," the group's president, former congressman Pat Toomey, said in a statement.

Senate Democratic leader Harry Reid of Nevada said the report "confirms that the so-called Social Security crisis exists in only one place: the minds of Republicans."

Reid again took issue with the president's proposal to allow younger workers to invest up to 4 percent of their wages subject to Social Security taxes. The senator said putting that plan into law would make the Social Security trust fund insolvent in 2030, some 11 years earlier than the trustees projected.

Labor leaders, who have opposed the changes, sided with Reid.

"There is no need to rush into a reckless scheme to divert trillions of dollars out of the Social Security trust funds and into private accounts," said John Sweeney, president of the AFL-CIO. "Let's take the time to get it right."

Virtually ignored by both sides were the findings of a separate report from the trustees, also updated annually, that said Medicare, the health care program for the elderly and disabled, began paying out more in benefits than it received in taxes as of last year. The trustees also predicted Medicare would go broke in 2020, one year later than they estimated in 2004, but still more than two decades ahead of Social Security.

The trustees estimated that the premiums Medicare beneficiaries pay for doctor visits would increase about 12 percent next year, from $78.20 a month now to $87.70 in 2005. This year's premiums are 17 percent above what they were in 2004.

The trustees said Social Security's unfunded obligations would total $4 trillion over the next 75 years, an increase from last year's projection of $3.7 trillion.

Bush has said he will not raise the current 12.4 percent payroll tax to deal with the financial problem. He has said he would consider raising the $90,000 cap on income that is subject to the payroll tax.

In the report, the trustees said of proposed changes, "The sooner adjustments are made, the smaller and less abrupt they will have to be."

The report said in 2041, the new date for Social Security's insolvency, payroll taxes will generate enough income to cover 74 percent of benefit payments. That is a slight increase from last year, when the trustees estimated that 73 percent of benefits would be covered in the year that the trust fund went broke.



For Medicare, the trustees estimated that taxes would be sufficient to cover 79 percent of the program's cost in 2020, when the Medicare trust fund is exhausted. Last year, when the insolvency date was projected to be 2019, tax income was estimated to be sufficient to pay 81 percent of the program's costs.

Social Security provides retirement, survivors and disability income for 47.6 million Americans. Medicare provides health care for 41.7 million older and disabled people.

___

[T-Man007]

TweetThat's because they need to revamp the tax system. I believe in a national sales tax so all those cash income people and all those rich phukers who cheat on their taxes will start to pay their part. My buddy's father-in-law makes over 25 million a year but his taxes are the equivalent to someone who makes about 5 million. That jack ass and all the rest of them are the reason for this. If every millionaire and billionaire had to pay at the register for all their toys, you can bet you butt they would start to pay their fair share. And don't even get me started on the billions and billions that go the illegal immigrants, drug dealers, and all other cash enterprises. If there was a national tax with a 1-2% portion going to social security it would double in a matter of years. Just think about it, every dollar you spend would contribute 1 to 2$ to SS. That would mount up so fast they wouldn't know what to do with it. Additionally, because people would have their entire check to spend, and not just a portion, they would buy even more stuff which would increase the economy, and further increase the exchange of money adding even more to SS.

[mick-G]

TweetNot everybody who is a millionare cheats on their taxes T-man. Some ppl just know how to shelter and put their money into things that they can use for deductions so they don't have to pay Uncle Sam as much. It is just good old capitolism which is the American way isn't it? As far as the sales tax going up, f-uk that! Last time our sales tax went up from 4 to 6% they said or property taxes would be adjusted. Now their just as high if not higher, and the 6% tax is still there. I think it is more of an abuse of funds in the government and ppl in congress spending money like water on personal limos, using gov credit cards, meals that cost 1k a plate for so called causes. Hell the working class are always the ones getting hit every time they need $ for this and that, when they spend billions.

[T-Man007]

TweetTrue, but besides the millionaires, and I didn't mean all of them by the way, the cash only people who don't pay any taxes is a problem. That is where most of my soap box preaching is geared towards. These people pay nothing except 6 or 7% sales tax yet they make tens of thousands of dollars a year and contribute nothing to SS or the feds. That is what pisses me off the most. If every person in this country actually paid their fair share there would be less taxes and there would be a SS surplus.

Now, to your commit, you are 100% correct. Those politicians spend way too much on personal stuff. Just like you said, Limos, high priced meals for a "cause", last minute private jet flights, personal vehicles, etc...

[mick-G]

TweetWell, i wasn't implying that you meant all of them, but in any event, the only ppl i know that have that kind of money that don't pay some kind of income tax are ex-business men that are retired or semi-retired. To shelter everything, or almost everything you have, you would have to either be doing it illegally or writing off more dedcutions than you are making which is very hard if not impossible to do, maybe unless you have alot of income properties. I know many ppl that are in business of the own that don't paying Social Security, and that is not illegal. Example: I know a businessman that owns three grocery stores. He is a self-made millionare, he prob makes around $1.5M a yr gross, but when he has his accountant does his quarterly returns, he doesnt have him deduct for SSI. This is not illegal. He just won't get much when he is ready to receive it. Yes, i believe there are some ppl that cheat and find loopholes in the system, but i do not personally think that the working middle to upper-middles class should have to support a system that is mis-managed and in need of upgrading. Look at all the billions that go into lottery, pork belly funds, oh, and how bout all the billions being spent in Iraq, which is another story, lol! I just think our government spends way to much and should be held accountable. Im one that is tired of paying higher and higher taxes, when i receive not much in income credits.