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The Social Security Crisis Is Even Worse Than We Thought

In avoiding political discomfort for decades, Congress and presidents have set the nation up for an economic and social catastrophe.

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The Social Security Administration recently announced that the Old-Age and Survivors Insurance trust fund will run out of money in late 2032. The government will no longer be able to pay retirees their full promised benefits at that time.

The new date is earlier than previously expected: The deadline has been moving steadily closer to the present as revenues fall short of the government’s projections. The Medicare trust fund will run out of money in 2033, as well.

This is a rapidly approaching crisis for retirees, prospective retirees, taxpayers, the government, the U.S. economy, and recipients of government welfare benefits. When the Social Security trust fund runs out of money six years from now (or earlier), the projected income from payroll taxes will cover only 78 percent of promised benefits. The government will have to borrow more money, reduce benefits, raise taxes, extend the retirement age, and/or cut other spending. Most of those options would be inflationary, recessionary, or both.

The draining of the Social Security trust fund is a short-term crisis that has arisen from a long-term problem, as is the case with so many of our nation’s current troubles.

The program’s trustees said revenues are less than expected because of last year’s reduction of the tax on Social Security benefits, plus declining fertility rates and lower immigration. The real, fundamental cause of the problem is the aging of the nation’s population, as working........

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