One of America's most trusted government programs is in deep trouble, but no one seems to want to believe it. Candidly, the fragility of our economy coupled with unrestrained government spending should shock taxpayers.
The Social Security Board of Trustees released its 2016 report in mid-June, a yearly report card capturing lots of numbers to reflect the health of the government retirement program. The status of Social Security has not improved and is declining. A few excerpts:
- Social Security will be insolvent, unless dramatically reformed, by 2034 - in less than two decades.
- 2022 is the first year, according to the Social Security Administration (SSA), that "cost exceeds total income." That's just six years.
- In 2015, the report recorded a $26 trillion fiscal gap between obligations of the program to participants compared to anticipated collections from wages, taxes.
- In 2016, the same report recorded that fiscal gap had increased $6 trillion to $32 trillion from just one year earlier.
In its "Summary of the 2016 Annual Reports" publicly available at the Social Security Administration's website, both the trustees of Social Security and Medicare - the latter the payroll-deduction-funded health care for seniors - make a declarative statement that should inform and concern. Verbatim: "Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing. Lawmakers have a broad continuum of policy options that would close or reduce the long-term financing shortfall of both programs."
Another factor that should distress everyone is the funding of the benefits. These "lock box" programs that supposedly hold your paycheck deductions for your future use in retirement for both income and health care have been spent on budget needs by big-government types who make promises with no understanding of taxpayer burden.
Acknowledging that current payments to seniors are dependent upon paycheck deductions and contributions of current workers, the situation is facing a big problem. There are not enough workers making contributions from their wages to maintain the payment of benefits into the near future.
In 1945, 41.9 workers paid into Social Security for each beneficiary receiving payment. In 2010, that number was 2.9 workers per recipient.
Plainly, two dramatic factors have converged: There is a historic number of retirees who deserve the benefit that was withheld from their wages combined with a historic low of workers in the labor force.
At its inception, Social Security was meant to supplement retirement income and was never meant to serve as a pool of money for other general budget spending. In three weeks, the Social Security program will have existed for 81 years. When it was signed into law on Aug. 14, 1935, the average life expectancy was only 58 years for men and 62 for women, according to SSA, with the Social Security benefit available at 65 years of age.
Now, however, the life expectancy of men is 76.9 years and 81.6 years for women. The retirement age has remained little changed from 65 years, when benefits are typically received.
Yes, it's an election year. Politicians have their hands full making promises. Just understand a hard fact. As there are fewer taxpayers (those working and spending), there is less money in the U.S. Treasury. Federal spending has exploded, and, no, it's not because of military spending, which is only 16 percent of the budget (including the Department of Homeland Security).
America's in a financial mess. Programs like Social Security are in jeopardy because of reckless spending, including both corporate and entitlement welfare. It must stop.
Robin Smith, a former Tennessee Republican Party chairwoman, is owner of Rivers Edge Alliance.