Social Security Trustees: The "Do Nothing" Emperor Has No Clothes - Guest Blog by Dr. Jeff BrownBy For Our Grandchildren

On Monday the Social Security Trustees released their annual Trustee’s Report on the status of the U.S. Social Security system.  The news confirms what all responsible policy analysts already know – that Social Security is on an unsustainable fiscal course and is in need of reform.  In other words, we are now one step closer to watching the “predictable surprise” of large deficits unfold.

Next year, in 2008, the first of the baby boomers will begin turning 62 and collecting benefits from Social Security. As a result of this demographic tidal wave, Social Security’s annual costs will begin rising dramatically.  In just 10 years, by the time today’s 2nd graders are graduating high school, the annual costs of the program will exceed the cash it is bringing in.

For those in the “Do Nothing” camp who claim that through some combination of faster than expected economic growth or other good fortune we can avert the need for change, the Trustees provide some sobering data.  Specifically, they show that there is a 95% chance that the program will begin cash deficits sometime between 2013 and 2022.  In other words, the deficits are coming, and no amount of wishful thinking is going to make the problem go away. Once the deficits begin, they will not relent.  Unless action is taken soon to rein in the costs of the program, the Trustees estimate that by 2035, the cost of paying full promised benefits will exceed 17% of a workers earnings (versus the current payroll tax of 12.4%).

Once again, the report confirms that taking action soon is preferable to waiting. As the Trustees themselves write, “The longer we wait to address these challenges, the more limited will be the options available, the greater will be the required adjustments, and the more severe the potential detrimental economic impact on our nation."

In short, the Trustees’ Report shows once again that the “Do Nothing” Emperor really does have no clothes.

Comments

[Harry Thompson]

When will someone have the courage to step up & reveal the dirty little secret... Socialist Insecurity is not a constitutional function of the central government, but has become the politicians` job security scheme, knowing retirees vote in greater numbers than the silent majority of FICA payers. Unlike the real world, where the term `trustee` usually means to manage/oversee assets for the benefit of another, the SSA `trustees` oversee a government sponsored Ponzi scheme, that causes FICA payers to forfeit their `contributions` to the U. S. treasury if they don`t live to collect any Socialist Insecurity benefits, or have no eligible survivors. Mr. Ponzi would be proud that his namesake scheme is alive & well, the only difference, his scheme was strictly voluntary, which is how Socialist Insecurity should be structured, `for our grandchildren.`