The Social Security Board of Trustees today released its
annual report on the financial health of the Social Security Trust Funds. The good news: the program has $69 billion in annual surplus in 2011; the projected trust fund balance for 2011 is $2.7 trillion.
The bad news is that the trustees project that, if no change were made in the intervening years, as of 2036 there will be sufficient non-interest income coming in to pay about 77 percent of scheduled benefits. That's a year sooner than last year's report, reflecting the ongoing high levels of unemployment in this the Wall Street-caused extended economic downturn. Last year, Social Security contributions were down by 1.1 percent of payroll, at least $ 60 billion, reflecting high unemployment. Likewise, the Trustees moved the target date for the Medicare hospital trust fund to be exhausted from 2029 to 2024 because of a weaker economy with less contributions, as well as increasing healthcare costs.
Additional analysis from the report:
- The point at which non-interest income fell below program costs was 2010. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.
- The projected actuarial deficit over the 75-year long-range period is 2.22 percent of taxable payroll -- 0.30 percentage point larger than in last year’s report.
- Over the 75-year period, the Trust Funds would require additional revenue equivalent to $6.5 trillion in present value dollars to pay all scheduled benefits.
One potential revenue source, along with lifting the payroll tax cap, would be a tax on frequent Wall Street trades. Financial speculation put us in this downturn, it should help us out of it. Beyond that, restoring the payroll tax levels, cut in last year's tax deal, and lifting the current ceiling of $106,000 of taxable income for Social Security would help restore the program's long-term solvency. As, of course, would be getting Americans back to work and paying into the system. A concerted job creation effort isn't just critical for getting the nation's economy back on track, but for securing Social Security.
The official White House response comes from Health and Human Services Secretary Kathleen Sebelius, who is also a Trustee, and focuses on the savings to Medicare in the Affordable Care Act.
The Obama Administration has already taken steps to strengthen and extend the solvency of Medicare, implementing policies including those in the Affordable Care Act that will save nearly $120 billion for Medicare over the next five years. Thanks to these essential reforms, today’s report found that the Medicare Hospital Insurance (HI) Trust Fund will remain solvent until 2024 and the actuarial deficit has fallen by 80 percent of taxable payroll since 2009, the year before the Affordable Care Act was passed. Over the next 75 years, Medicare’s Hospital Insurance costs are projected to be about 25 percent lower due to the new law....
Some in Congress want to take us backwards and have proposed a plan that would end Medicare as we know it and shift costs to seniors and the most vulnerable. That’s the wrong way to reform Medicare. Under the Republican plan, traditional Medicare would be repealed by 2022 and replaced by private vouchers. And the Congressional Budget Office found that a typical 65-year-old who becomes eligible for Medicare would pay an extra $6,400 for health care.
Representative Xavier Becerra (CA-31), Vice Chair of the House Democratic Caucus and Ranking Member of the Social Security Subcommittee, released this statement (via e-mail):
"Today’s report confirms what we already know: Social Security will weather the storm once again. Over the last seventy-five years Social Security has survived thirteen recessions and kept its promise to pay earned benefits to our seniors, disabled workers, widows and children on time and in full. This year $69 billion will be added to the trust fund, bringing the balance to $2.7 trillion, and enabling Social Security to pay workers the benefits they have earned for many years to come. You simply can't buy the kind of retirement, disability and life-insurance protection on the private market that Social Security provides.
Republicans will use this report to further their effort to hold the debt ceiling hostage in exchange for entitlement reform, a deal that Obama and Congressional Democrats don't have to make. Republican leaders understand full well the political danger they would face if they were responsible for the ensuing economic chaos of the debt limit is not raised.
What this report argues for is what Speaker John Boehner said would be his party's focus if put in control of the House: jobs. Where are those jobs, Secretary Boehner?
Bruce Webb has ongoing analysis in this diary.