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Reply #78: Reality. It hurts. The fact that SS is long term insolvent is not in dispute. [View All]

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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-27-10 06:40 PM
Response to Reply #72
78. Reality. It hurts. The fact that SS is long term insolvent is not in dispute.
It is universally accepted by all parties, and the SSA itself.

SSA Trust fund will continue to grow in value till approximately 2018 at which point it will peak. The trust fund can then sustain current operations (current payroll contributions, current cap, current benefits) until 2042. At which point the fund will be exhausted and year 2042 revenue (from payroll taxes) will be insufficient to pay 100% of promised benefits for year 2042.

So EVEN ASSUMING 100% of the trust fund is paid back from general fund in full with 100% of promised interest there is a shortfall.

This shortfall can be overcome by:
a) increased revenue: raising cap, raising contribution rate, making contributions progressive, requiring all wage earners to participate
b) decreases expenses: reduced benefits, later retirement, making payments progressive
c) some combination of both

However without making changes prior to 2042 the changes required "on the spot" will be severe. Either a 50% increase in payroll tax (dropping bill on our children and their children) OR a 25% across the board reduction in benefits.

Either way the system isn't solvent forever. Small change will happen sooner, or drastic change will happen later.
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