It's a blow to some members of the Catfood Commission, surely, but the annual Social Security Trustees report [pdf} has finally been released, and shows that long term, Social Security is doing just fine, thank you very much.
However, there's some bad news in the near-term economic situation because of continued high unemployment. Dean Baker provides this analysis:
The 2009 report projected that the unemployment rate would average 8.2 percent for 2009 and 8.8 percent for the current year. It projected that the unemployment rate would fall below 6.0 percent by 2014. The actual unemployment rate for 2009 was 9.3 percent. The new report projects that the unemployment rate in 2010 will average 10.0 percent and that unemployment will not fall below 6.0 percent until 2016.
What this means for the program is that the benefits Social Security is expected to pay out this year will slightly exceed the money coming in from payroll taxes. There are other sources of income for the program, however, including the interest income on the $2.5 trillion trust fund. Thus, the Trustees report the program should remain in surplus until 2024. That means the the trust fund can remain untouched until 2025, and--all things being equal to the situation in 2010--the fund would become exhausted in 2037. However:
[A]t a press conference Thursday, Social Security Commissioner Michael J. Astrue, one of the government trustees releasing the report, begged reporters not to scare the public by exaggerating the significance of trust fund exhaustion
"That does not mean that there will be no money left," Astrue said. At that point, even if Congress took no action, Social Security could still pay out 78 percent of expected benefits from annual revenues. "That would be a bad result, but it is a far cry from having no benefits at all," he said.
Now for the good news.
Robert Greenstein, a leading liberal budget expert who directs the Center on Budget and Policy Priorities, called attention to what he called the "huge reduction" in Medicare's long-term budget problems. The new report projects an 80 percent reduction in the 75-year shortfall for the Medicare trust fund, from 3.88 percent of taxable payroll to a much more manageable 0.66 percent.
That means Medicare "is in dramatically better financial shape than it was prior to the enactment of the health reform law," even as the law simultaneously improves coverage and reduces premiums, Greenstein told the Huffington Post.
And these are reliable numbers, he said. "These are not political numbers. These numbers are based on the work of the Social Security and Medicare actuaries. Political officials can put whatever spin they want on the numbers, but the numbers themselves are generally not subject to political influence."
Krugman shows it in graphical form.
[T]he Medicare actuaries believe that the cost-saving provisions in the Obama health reform will make a huge difference to the long-run budget outlook. Yes, it’s just a projection, and debatable like all projections. And it’s still not enough. But anyone who both claims to be worried about the long-run deficit and was opposed to health reform has some explaining to do.
As do those who will continue to use the deficit as an excuse to gut Social Security in order to "save" it.
Nancy Altman, co-chairman of the Strengthen Social Security Campaign, said in a statement: "Every year, the trustees' reports become an excuse for fear mongering by those who should know better. This year, the news is especially good for Medicare, thanks to the enactment of health care reform. The news for Social Security is even better...
"Unfortunately, we know there are some in Washington, including a few members of the Administration's fiscal commission, who will use this report to try to advance their agenda of cuts to Social Security benefits, including raising the retirement age. Politicians should stop scaring the American people. Social Security is strong and should be strengthened, not cut."
Deficit peacocks need to turn their efforts to the two thing that would truly strengthen Social Security and the nation's economy: creating jobs and shoring up revenues by ending the Bush tax cuts for the wealthy.