November 21, 2014

NEW SOCIAL SECURITY TRUSTEES' REPORT INDICATES LONG TERM PROBLEMS REMAIN; REAL REFORM STILL NEEDED

WASHINGTON -- The Concord Coalition urges lawmakers not to let today's report by the Social Security Trustees obscure the need for real reform of the program.  Despite three more years of trust fund solvency, Social Security's operating balance – the difference between its anticipated outlays and dedicated tax revenues – is still scheduled to go into the red in just 15 years.

 

         “We're simply treading water.  Last year the first cash deficit was projected to occur in 2014.  In this year's report that date is 2015.  So our window of opportunity to enact timely changes has not widened.  Moreover, the basic problem remains unchanged – Social Security is fiscally unsustainable in its current form, and its structural and demographic problems still exist,” said Executive Director Robert Bixby.

 

         “The booming economy, along with certain changes in the trustees' assumptions regarding productivity and birth rate, have contributed three more years to the Social Security trust funds' official solvency.  But focusing on trust fund solvency ignores the fact that the trust fund is an internal governmental bookkeeping device.  It represents a stack of Treasury IOUs, the existence of which does not ease the economic burden on future taxpayers who will have to make good on these IOUs.  Once the operating balance turns negative in 2015, Social Security's obligations can only be met three ways  – through tax increases, cutting other spending or more borrowing from the public in the form of a higher national debt – exactly the same ways those obligations would be met if the trust fund didn't exist.

 

         “If you look beyond the issue of trust fund solvency, the need for reform is still apparent. Last year's report projected that the program would only be able to pay 72 percent of benefits in 2040.  In today's report that figure is increased to 73 percent.  Regardless of whether it is 72 or 73 percent, the fact is that we still have a program which promises more than it can deliver under current law.  Today's report does not indicate otherwise,” Bixby said.