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.

Medicare, Medicaid, and Social Security Will Consume All Tax Revenues in 2049Worse, 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?

Comments (2)

John Ward - April 24, 2012

The Heritage Foundation man who was on the PBS Newshour last evening on the subject of Social Security solvency failed to point out that cashing of the special bonds in the SS Trust Fund is adding to the national debt. This is not to say that the Treasury does not owe the money to SS, but that the SS Trust Fund has no cash money. However, the Treasury is short on funds and must borrow forty cents on every dollar it gives out to SS.

Jim Owens - April 25, 2012

The recent 2% reduction in Social Security funding from the payroll tax shows you how the ‘rob from Peter to pay Paul” philosophy works. The S.S. Trust fund is sacred it is to be treated with more respect than an IRA fund. This goes to show you nothing is sacred anymore, no Cardinal sin for doing the unthinkable. Of course it had to be politics, but this funding error better be reversed, or this is a sign that our politicians don’t care or have given up on saving S.S.. They don’t need it anyway so why do they care. Thinks Heritage for presenting this.

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