WASHINGTON--New projections estimating that Social Security will begin running large annual cash deficits shortly after the massive baby boom generation begins retiring in 2008 should serve as a catalyst for fundamental reform of the system, according to the bipartisan Concord Coalition.
"Today's report of the Social Security Trustees should serve as a wake up call for those who would like to delay reform efforts," said Concord Executive Director Martha Phillips. "The serious problems facing Social Security in little more than a decade deserve the immediate attention of both policymakers and the American people."
According to Phillips, the Trustees' estimate that Social Security's trust funds will be solvent until 2032 is irrelevant from an economic standpoint.
"Since the trust funds consist of nothing but stacks of Treasury IOUs, their existence will not ease the economic burden that beneficiaries and taxpayers will face once payroll taxes become insufficient to meet the program's costs in 2013," Phillips said. "At that point, Social Security's obligations can only be met through tax increases, benefit cuts or more borrowing from the public, exactly the same as if the trust fund never existed."
According to the Trustees' latest report, Social Security's operating balance--the annual difference between its outlays and dedicated tax revenues--is scheduled to begin falling in 2002 and turn into an operating deficit in 2013. The report projects that the system's cash deficit will widen to an annual shortfall of $684 billion by 2030, shortly before the trust funds go "bankrupt."
Note: The latest Social Security Trustees report is available at the Social Security Administration's website: http://www.ssa.gov.