Once the privatization threat has been shelved, Social Security's fate will be determined by the OVERALL condition of US Government finances.
And, this in the next TEN years, not thirty.
The answer in a nutshell would be that Social Security's finances are just fine -- on paper -- but the cash flow problems of the US Government will very soon threaten EVERY program and force drastic cuts and a clash of interests among ALL constituencies.
Here is the projection from the GAO, which tells the story of the proverbial train wreck approaching:
GAO's site, with slideshow presentation of further data:
http://www.gao.gov/special.pubs/longterm/simulations.html
Details below,
EVERY ONE of these other expense categories will draw upon the limited dollars available for YOUR Social Security retirement income.
YOUR approx. $250,000 Social Security annuity will be decimated, worth maybe $50,000-$100,000 on your lifetime payments of about $150,000 (including employer's half).
The $5 TRILLION Trust Fund will be worth little in 2018, if it is engulfed by $15 TRILLION of other Federal debt run up largely by Reagan and the Bushes.
Want to talk about the "miracle of compound interest?" Look at the rising BLUE block of interest payments (and these assume steady interest rates, which I believe are unlikely).
By 2040, interest payments take up ALL Federal revenues (including FICA taxes supposed to go to Social Security).
At that point, is a Federal debt at 250% of GDP, and deficits at 25% of GDP even possible? It will not go this far -- small consolation, to be sure -- because the financial world will not lend into the collapsing Treasury bond environment this represents. So -- the crunch will come long before 2040. By 2015, in my book.
(I have the choice of beginning to collect partial Social Security in 2012, or wait until 2015 for the "full" amount. Any guess which I will choose, and what millions of others are likely to do, once the cash flow crisis is publicized?)
And -- is it any wonder that young people may be lured by the idea of separating some of their money from this "failing Ponzi", which Bush himself is ensuring the collapse of?
Assuredly, we will be headed for the typical banana republic economy of little employable capital, little high-value production, and massive poverty surrounding walled rich enclaves.
The growing RED segment is for Medicare and Medicaid. Anyone want to guess how solid this promise is?
Only the utmost in EFFICIENT design and delivery can begin to meet this obligation to ourselves, for the budget proportion indicated above will never be paid, neither by Republican or Democrat.
For us to get even half of the care we now believe we are pre-paying for, we will need single-payer healthcare, in order to cut out the insurance industry's 35% expense drain on our healthcare system. And -- a cap on end-of-life expense. And -- cuts in billing rates and expensive technology. And -- healthier lifestyles to reduce our draw on the system. All this -- and we may barely squeak through.
The GREEN -- That's Social Security. Growing, but not the ballooning we see in the first two. Social Security is like a pension or 401(k) we have contributed to, paid for, and a modest return is due. It really is the most LEGITIMATE item of all shown here. To let this be choked out by the growth of other items seizing priority position is the height of folly.
I read the Cato Institute's screeds pointing at the same fiscal crisis cited here -- as if someone OTHER than their wingnut buddies had created it! -- and then demanding that Social Security pay the bill for the rest. Uh, ya, right.
The YELLOW -- Ahhhh... The smell of gunpowder (and burning flesh) drifts from behind its towering cap on the budget skyscraper. And the military -- DON't call it "Defense" -- has just about devoured up the rest of "discretionary" spending.
Within it now is the $500+ billion charge ("Fear Tax"?) we spend this year to, what? -- protect us from 19 more guys with boxcutters? Conquer oilfields for Conoco? Sheesh! How stupid can people be, and how gullible are they to let this much money be stolen from them?
I've ranted enough over the months here, so I'll just put all the math and mayhem here into one sentence:
If you look at the squeeze portended in the single graphic above, you may accurately conclude that EVERY dollar of YOUR taxes you let be spent on the military today, or otherwise WASTED, is a dollar YOU WILL NOT SEE in YOUR Social Security check the day you come to need it.