Heritage Foundation scholar David John summarizes a new report from the trustees of the Social Security program:
The April 23 report shows that all people who receive Social Security benefits face about a 25 percent benefit cut as soon as 2033—three years earlier than predicted in last year’s report. The program’s long-term deficit is now larger than it was before the 1983 reforms. In order to pay all of its promised benefits, Social Security would require massive annual injections of general revenue tax money in addition to what the program receives from payroll taxes.
Social Security is already running annual deficits, John adds. In 2011, benefits totaled $11.5 billion more than contributions. These deficits will only grow as more and more Baby Boomers retire.
Worse, many lawmakers continue to believe that the program can be saved by the Social Security trust fund. But as John notes, “the existence of a trust fund does not make Social Security healthy.” Back in 2004, he pointed out that “the Social Security trust fund is merely an accounting device filled with IOUs that future taxpayers must repay.” Taxpayers are still on the hook.
Congress needs to make urgent reforms to Social Security to ensure its long-term solvency. John insists lawmakers act quickly: “A further delay in addressing Social Security’s financial problems will only make the situation even worse.”
Heritage’s Saving the American Dream plan would reform Social Security and keep the program solvent while also lowering taxes, cutting spending and reducing the size and scope of government.
What do you think Congress can do to protect taxpayers and future retirees?