Sunday, January 21, 2018

Social Security's Death Knell Is Ringing. Can You Hear It?

Social Security is, barring an immediate and massive overhaul in how benefits are paid to the back-end of the Baby Boomer generation and beyond, on its deathbed.  There can be no mistaking that fact.
Veronique de Rugy explains at Reason:
Since 2010, [Social Security] has been running at a cash-flow deficit – meaning that the Social Security payroll taxes the government collects aren't enough to cover the benefits it's obliged to pay out.  That should have been a signal that the time had come to look at reform.
Instead, we've spent the last seven years ignoring the problem.  To get by, the program started tapping into assets set aside beginning in the 1980s for rainy days.  Prior to 2010, the program collected more in payroll taxes than was needed to collect benefits at the time.  The leftovers were "invested" in Treasury bonds through the Old-Age Trust Fund, which is now being drawn down.
The 2010 mark for this cash-flow deficit didn't occur willy-nilly.  It could be argued that our government hastened, or at the very least exacerbated, this cash-flow deficit with its "payroll tax holiday," a bipartisan effort instituted in late 2009 that persisted until 2013.  This political maneuver slashed payroll taxes by roughly one third, from 6.2% to 4.2%.  The uncollected 2% (not peanuts in a country the size of ours) happens to coincide with the moment in time in which the government's payroll tax receipts couldn't cover its Social Security liabilities.  The cost of this "payroll tax holiday" is estimated to be $240 billion in tax revenue, some of which, at least, would have otherwise gone to pay out Social Security's beneficiaries.  Much of this $240 billion in uncollected revenue necessarily became issued federal debt.

http://www.americanthinker.com/articles/2018/01/social_securitys_death_knell_is_ringing_can_you_hear_it.html#ixzz54pbjmMXA 

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