Wednesday, January 19, 2005

The True Cost of Social Security

The American Spectator

I really wish people (Democrats, anti-SS reformers, NYT's....) would quit jerking everyone around and try to understand without hyperbole what the true situation is with Social Security. Every time there's a new wave of Democrats spewing forth their disinformation campaign I get a call from my Dad who is going on 83 years of age. We go through this whole routine of "well it won't affect me so I don't have to worry!" Then I say "Yeah but what about your children and grandchildren? They are the ones who are going to have to pay for you not worrying about it. President Bush and many Republicans at least are taking the political risk of looking to the future and not just next year". So, this article does some splainin of the true cost. It's not an easy read to understand because we've made SS into this monolithic maze of gobbleygook through the shenanigans of Congress and previous adminstrations.

Here to me is the key section:
Thus, $3.7 trillion is not what is needed over the next 75 years. It is what the federal government would have to invest right now to meet the Social Security's 75-year shortfall.

Since the federal government isn't going to come up with an extra $3.7 trillion to invest tomorrow, a more useful figure in understanding the shortfall is the "cumulative cost." That is the cost to the taxpayers, over a 75-year period, of paying off all the treasury bonds in the Social Security trust fund plus meeting all the obligations of Social Security once the trust fund runs dry. Using data from the 2004 Trustees' report, that number is (sit down) $24.9 trillion in inflation-adjusted dollars! That is an annual average of $332 billion extra that the taxpayers will have to pony up for Social Security. Even that doesn't tell the full story because included are the years 2004-2018 when Social Security is still running a surplus. After 2018, the annual Social Security deficit grows quickly: By 2022 taxpayers will have to pay almost $100 billion above what they will shell out in payroll taxes to meet all of Social Security's obligations. That will reach over $200 billion in 2027, over $300 billion in 2033, and $400 billion in 2046. If you are under 40 years of age, chances are quite good you will live to see all of those dates.

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