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Social Security Official: Program Now Imperiled

One of the Trustees of the Social Security program is warning that the nation’s retirement system is on the cusp of becoming impossible to rescue because of a failure of leadership during the past few years to fix what ails it.

Social Security Trustee Charles Blahous, in an article published today in the economics journal e21, implicitly lays a portion of the blame directly at the door of President Obama, who has not even proposed major entitlement program reforms. Blahous writes that there has been “a failure of national policy leadership” during the past few years. While he notes that it is Congress that has not enacted a legislative fix, it is clear the leadership on such a controversial issue can only come from the White House.

Blahous, who as a Trustee is one of six officials tasked with overseeing the program, is also a former adviser on Social Security issues to George W. Bush. But the article is not partisan in tone and mostly urges action rather than any specific cure.

Blahous’s main goal is to ring the alarm:

Social Security’s future, at least in the form it has existed dating back to FDR, is now greatly imperiled. The last few years of legislative neglect — due to a failure of national policy leadership coming just as the baby boomers have begun to retire — have drastically harmed the program’s future financial prospects.

Individuals now planning their financial futures, whether as taxpayers or as beneficiaries, should be pricing in a substantial risk that the federal government will not be able to maintain Social Security as a self-financing, stand-alone program over the long term. If Social Security financing corrections are not enacted in 2013, or at the very latest by 2015, it becomes fairly likely that they will not be enacted at all.

Blahous notes that arguments for delay, which have often been trumpeted by Democrats, are misleading. While Social Security is not officially “scheduled” to go bankrupt until 2033, the issue is nevertheless extremely urgent.

That’s because no Congress wants to touch the benefits of current or near-retirees, and the number of baby boomers retiring is expanding exponentially. This means that every year the cost of fixing the problem vastly increases and must be borne by a smaller number of workers relative to the entire population.

Blahous writes:

There is a huge disparity between the problem’s urgency and the rhetoric applied to it by substantial factions of the body politic. Even as time is running out for a workable compromise, some continue to play a high-stakes gamble: that if the urgency is downplayed and action delayed past the next few elections, it can be dealt with when the political alignment may be more advantageous to one side.

This gambit has now been extended to the point of imperiling Social Security’s long-term outlook. Too many key players, however, do not yet realize this.

What’s more, there has never had to be a political compromise on cuts of the magnitude now required. The last time one party controlled Congress and the White House was during the first two years of Obama’s administration, and he and the Democrats did nothing.

Today’s long-term problem, according to Blahous, is much worse than in 1983, when a bipartisan compromise was just barely achieved to rescue the program. Compromise in today’s polarized climate will be even tougher.

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13 Responses to Social Security Official: Program Now Imperiled

  1. Another area of the ‘obama pass’ by the media was his decision to cut the SS taxes over the last couple of years to give us a ‘tax break’. Think about what he did, just as BB were hitting SS and the unemployment was cutting into SS revenues, he further cut the revenues by cutting the taxes. Basic budget knowledge will tell anyone that a system in trouble will only become more troubled when the demand increases and the revenue decreases drastically.

    What is NOT Obama’s fault alone is 50 years of raiding the surpluses in SS and using them for general funds.

    Maybe Keith can answer this question. When the budget was balanced during the last few years of Clinton, did the balancing include the SS surpluses being moved to the general fund? I’ve never been able to find that answer.

    barkleypontree.blogspot.com

  2. Some of my peers and I are willing to take a buy-out from Social Security and Medicare. The government can give us back what we paid into the system, adjusted for inflation with a modest interest accrual, and we’re all quits.

    • Sorry but the idea that people should be forced to pay into a government designed system to help them in their old age certainly seemed like a fine idea when Social Security was implemented. But as with all government designed systems, its original intent was constantly changed as the political winds changed and of course, ended up adding new categories of beneficiaries until practically everyone could get a check. And as with all government involvement the one truism never changes-do not depend on the government!

      • I figured this out about a year ago but I’m winging on memory here. I traced back SS receipts and payouts, I think it was to 1984, when they doubled the taxes. If you added up all the yearly receipts to SS and the payouts, there should be a 1.8 trilion dollar surplus in SS. Now, if you figured that back to 1930’s, I would guestimate it would be at least 3 trillion.

        The point is, the MAIN reason SS is in trouble is because politicians have been stealing the money to pay for pet projects. Had they not done so, had they taken those surpluses and put them in bank CD’s, the surplus probably would be 5 trillion. But they put in government IOU’s and now the IOUs are coming due and they don’t have the cash.

        Secondly, they tied increases to the CPI and have artificially kept the rate low over the last 20 years, meaning fewer cost of living increases. I take care of my dad, have blown thru all my money, IRA’s and 401k’s taking care of my parents, so now we are struggling along on his RR retirement. Three of the last four years, he got no yearly increase. What has gas and food done in the last 4 years? His medicare supplement went from 380 to 480 in those four years. So the people getting the retirement money today are being hosed, the future recipients are going to be hosed, and there is at a minimum 3 trillion dollars stolen by republicans and democrats.

        On the other hand, their pensions are great and are not tied to the CPI. Nor are a lot of teachers; my ex college roommates mom was a teacher and pulls in 7k a month on her pension and she never made close to what my dad did as a railroad executive.

        barkleypontree.blogspot.com

  3. I’m resigned to the idea that my pitiful $580 SS payment will likely be slashed in the future. But I recognized SS early on for the Ponzi scheme it is and never actually counted on getting anything. It would be nice if they’d preserve Medicare, however…preferably without the death panels.

    • This is why Obamacare has death panels. They see the avalanche of baby boomer retirees coming their way. They need to thin the herd, so they will either starve us off or send us off to our just rewards ala Soylent Green factories. We must defeat tyranny.

  4. It’s obvious both sides of the political aisle think nothing of kicking the can down the stairs to the future when they won’t have to make the tough decisions. Common sense and leadership are certainly missing and have been for a long time. A morally and ethically bankrupt nation of welfare-entitlement mentality whiners and takers can’t possible expect to have a free lunch forever. We are becoming a mirror image of Britain.

  5. This is a huge Ponzi scheme and always has been. All you’re doing is buying an annuity. If an insurance company did what the government did, they’d be in jail. When it was first started most people died only a few years after rtirment, so the system was flush with cash. Now that we live into our 80’s and 90’s it was never going to become sustainable unless huge adjustments were made. But that has always been the third rail of politics. I’m hoping when the adults get elected in November they can begin a real discussion.