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Social Security Fund Dries Up

Blog Apr 25, 2012

The funds that run the Social Security program are kept in what is called a “trust fund.” Tax income is deposited into the trust fund on a daily basis and is “invested” in “special issue” securities. The cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund, so Congress can spend it as they please. That is a far cry from the “locked box” which term was originally used to describe how the precious Social Security money from the salaries of hard working Americans was going to be safeguarded.

In what seems to be a time honored tradition of continuing down an unsustainable path for the past few years, we now learn that the trust fund will reach exhaustion in 2035, at which time, benefits will need to be either reduced or there will only be enough to cover three-quarters of those slated for these pay-outs. In 2011 we were told that the funding of these benefits was solid until 2038, now months later we are being told 2035. And who knows what new time predictions will come in the years ahead.

In an annual report, the trustees said that in addition to the 44 million retirees and survivors of deceased workers the program serves, the Social Security’s disability program, that assists 11 million people will use up the money in it’s trust fund in 2016. It is beginning to look like the trust fund or at least those who administer it are not so trustworthy. Thank goodness the main trust fund that feeds the Medicare health-care program will not go belly-up until 2024. Yeah!

Timothy Geitner, one of the six trustees for the programs stated, “Millions of Americans rely on Social Security and Medicare for income and for health care, and millions more will do so in the future. These programs have the resources they need to fulfill their commitments to the American people for years to come.” That would be 23 years to be precise or until its next revision downward.

Enrollment in the disability insurance program has jumped in recent years. There will be 10.9 million recipients this year, according to the report, up 64 percent since 2000.

Spending on the disability program last year totaled $132 billion, while it took in $106 billion, the trustees said. It had $154 billion left in its trust fund last year. Once that dries up, the report said, incoming revenue will cover only 80 percent of scheduled benefits.

The choice seems to be between “Do we live within our budget?” or “How much of the golden goose can we slice off before it won’t lay any more golden eggs?” in the light of our evermore fragile social security.

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