Social Security Will Be Paying Out More Than It Receives In Just Five Years. The false assumption concerning Social Security solvency is that the solution will be fiscally responsible. The main advantage of the government over private industry is the ability to expand the money supply and increase the deficit. My bet on the repeal of ObamaCare replacement is that ObamaCare will not be repealed but patched up with a megaton of new dollars provided to states and insurance companies to keep it going. This patchwork quilt will be labeled something else but as with all entitlements it will not cut any benefits once the populace becomes dependent upon it. Same thing with SosSec. Dimms have never cared about the deficit or looking beyond their next election at the future. A good hunk of the GOP believes the same thing. They are called liberals in one party and moderates in the other.
When social security was first implemented in the 1930’s, America was a very different country. Especially in regards to demographics. The average life expectancy was roughly 18 years younger than it is now, and birth rates were a bit higher than they are now. By the 1950’s, the fertility rate was twice as high as it is in the 21st century.
In other words, for the first few decades, social security seemed very sustainable. Most people would only live long enough to benefit from it for a few years, and there was an abundance of young workers who could pay into the system.
Those days are long gone. As birth rates plummet and people live longer , (which otherwise should be considered a positive development) social security’s future is looking more and more bleak.
No matter how you slice it, it doesn’t seem possible to keep social security funded. In fact, social security is going to start paying out more money than it receives in just a few short years . It may even be insolvent before the baby boomer generation dies off.
According to the Social Security Board of Trustees, the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be depleted in 2034 .
When this happens, only 77 percent of benefits will be payable. That estimate is no change from last year’s estimate.
In addition, the Disability Insurance trust fund will be depleted in 2028, which is an improvement from last year’s estimate of 2023. Once that fund is depleted, 93 percent of benefits will be paid.
Right now, Social Security continues to take in through revenue more than it pays it through benefits, which is expected to continue until 2022. Once Social Security begins to pay out more than it takes in, it will be forced to liquidate the assets held by the trust funds.
In 2016, Social Security generated $957 billion in income. It only paid out $922 billion including $911 billion in benefits to 61 million beneficiaries.
But the solutions that have been proposed for this problem don’t hold much promise. For instance, we know that simply raising taxes won’t work.
But increasing the payroll tax is not a good long-term solution to fixing Social Security. For example a higher payroll tax would have negative economic effects. In addition, it’s not even clear that raising the payroll tax would even generate enough revenue .
(They will increase FICA taxes……at minimum they must raise the income cap on which the FICA tax is applied. They will increase the retirement age. They will cut retirement benefits through a “means testing” of the benefits, i.e. if a person has another source of retirement funding such as own lifetime savings or a private pension savings plan, or if one a net worth that is too high, the Social Security benefit will be cut or eliminated, and/or somehow taxed away because you “don’t need it”. Even if you paid in maximum FICA tax all of your life because you could afford it….you don’t get the benefits in old age because you don’t need it. From each according to his abilities…to each according to his needs. Gia capisci?)
In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!