Is It True?

8 Things to Learn for 2/2/2009 #5

Is it true that social security will take in more than it earns by 2010? The esteemed David Gregory, the new host of NBC's top rated Meet the Press, says it is, and surely, he'd know. Right?

Well, no. I guess not.

You see according to the Social Security Administration ...

The year-by-year relationship between income and cost rates shown in figure II.D2 illustrates the expected pattern of cash flows for the OASDI program over the full 75-year period. Under the intermediate assumptions, the OASDI cost rate is projected to increase rapidly and first exceed the income rate in 2017, producing cash-flow deficits thereafter. Redemption of trust fund assets will allow continuation of full benefit payments on a timely basis until 2041, when the trust funds are projected to become exhausted. This redemption process will require a flow of cash from the General Fund of the Treasury. Pressures on the Federal Budget will thus emerge well before 2041. Even if a trust fund’s assets are exhausted, however, tax income will continue to flow into the fund. Present tax rates are projected to be sufficient to pay 78 percent of scheduled benefits after trust fund exhaustion in 2041 and 75 percent of scheduled benefits in 2082.

What have we learned? We have learned that the SSA will take in enough money to pay benefits without dipping into the trust fund. Then, using the trust fund designed for this very purpose, the SSA will be able to pay full benefits until 2041. If no changes are made, they will still be able to pay 75% of scheduled benefits by 2082. Get that? Full benefits until 2041. At least.

Does this sound like a crisis to you?