According to the Congressional Budget Office (CBO), last year Social Security had a $37 billion dollar shortfall. This year the CBO estimates it will lose $45 billion. Over the next ten years, the CBO says the total debt incurred by Social Security will be somewhere in the neighborhood of $547 billion.
Politicians, mostly democrats, like to point out that the program is solvent through some year in the 2030’s, but really, since the program has always used the income from that year to pay for the costs of that year, this trust fund is a complete mirage. All it is is the rest of the government saying it’ll pay itself back from other funds. The Concord Center outlines this issue pretty well in the following quote:
The trust funds are simply a claim on future general revenues. They represent a promise from one arm of the government (Treasury) to pay another arm of the government (Social Security). Coming up with the cash to make good on that claim will mean squeezing out other spending, raising taxes, or borrowing from whoever is willing to lend us the money. Some combination of these will be necessary to close the gap and the sooner this problem is addressed, the better.
We can no longer pretend that today’s entitlement promises can be financed with today’s revenue level. In this regard, it is crucial to note that Social Security’s future draw on general revenues is small in comparison to the projected needs of Medicare and Medicaid. At some point soon, we need to decide how much to reduce promised benefits and/or raise taxes to pay for them. The fact that Social Security is already paying out more than it takes in — before the vast majority of baby boomers qualify for benefits — highlights the trade-offs that must be made to prevent an explosion of debt.
I made that last sentence bold because it is the scariest part. If we can’t even pay for the program when we’re in much better shape than we will be in 10, 20, 30 years… we’re really going to be in trouble when we have even fewer people in the workplace for each person collecting benefits.
Our taxes will skyrocket, our economy will suffer and our debt will balloon to a level that will undercut the funding of everything else in government… if we don’t start making hard choices, but much less painful than the choices available to us in 10 or 20 years, now.