Americas Social Security is running out! According to Social Security and Medicare Boards of Trustees “Projected long-run program costs for both Medicare and Social Security are not sustainable under currently scheduled financing, and will require legislative modifications if disruptive consequences for beneficiaries and taxpayers are to be avoided.” (Social Security Online). Other evidence shows “After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year.” (Social Security Online).
There are numerous causes and effects as to why Social Security is running out. First cause is Social Security is suffering from the weak economy. The effect this has is Social Security collects less in taxes than it pays out in benefits. A second cause is more people are relying on Social Security for income. This increased reliance in Social Security will affect recipient’s ability to live above the poverty line. Another cause is the federal government has borrowed all of the trust fund money and spent it. No money in the trust fund will affect federal government general revenues.
Social Security was originally signed into effect by Franklin D Roosevelt in 1935 (Social Security Online). The Social Security benefits include retirement income, disability income, Medicare and Medicaid, and death and survivorship benefits. Social Security is one of the largest government programs in the world, paying out hundreds of billions of dollars per year (Investopedia).
The first cause of Security running out is that it is suffering from the weak economy and has been for several years, which is a slower recovery than the government had anticipated. The program exceeded non-interest income in 2010, which was its first time since it was redone in 1983 (Social Security Online). It will also be further strained by the growing number of baby boomers retiring and applying for benefits. As it stands our country is in the worst economic crisis since Social Security was started during the Great Depression (Associated Press).
The economy effected Social Security’s projection that it would collect $45 billion less in payroll taxes in 2011 than it pays out in retirement, disability and survivor benefits, according to the nonpartisan Congressional Budget Office (CBO). That number almost tripled to $130 billion when the new cut in payroll taxes was included (The Fiscal Times Staff). CBO said in 2010 that Social Security would post surpluses for a few more years before permanently slipping into deficits in 2016, (Associated Press) which again had changed because of the slower economic recovery. “Social Security law requires program spending to match revenue, so a lack of action by lawmakers by that time will mean benefits will have to be cut 23 percent -- or the Social Security payroll tax increased to 16 percent, or a combination” (Armstrong and Faler).