Bruce Krasting has noticed something interesting. In a footnote in a recent CBO report on the economy and the Social Security trust funds there’s this breadcrumb:
CBO projects that the DI trust fund will be exhausted during fiscal year 2016. Under current law, the Commissioner of Social Security may not pay benefits in excess of the available balances in a trust fund, borrow money for a trust fund, or transfer money from one trust fund to another. However, following rules in the Deficit Control Act of 1985 (section 257(b)), CBO’s baseline assumes that the Commissioner will pay DI benefits in full even after the trust fund is exhausted.
Said another way, the Congressional Budget Office is assuming that the Social Security Administration will divert money from the old age benefits fund, what most of us think of as Social Security, to the disability insurance side to prevent the disability side of the ledger from being unable to pay benefits. This, however, will hasten the OASI’s own point of insolvency.
OASI’s trust fund is already being drawn down, earlier than expected, and the CBO’s most recent projection is that it will be exhausted in 2033. That doesn’t take into consideration the amounts that will be tapped in coming years to make up for the shortfall in DI. Think much, much sooner for OASI’s trust fund to be exhausted. My thinking has been within the next five years, certainly within the next ten years.
What I think should happen is that the fiction of the trust funds should be abandoned and full benefits paid from general revenues, paid for by decreases in discretionary spending. Very few people other than Social Security recipients like any part of that prescription. I also think that the Social Security retirement age should be increased and that it should be means-tested in, essentially, the same way it is now. I’m an equal opportunity ox-gorer.
I don’t find either of the other alternatives—increasing the payroll tax or reducing benefits to match revenues—poliically credible. We can kick the can down the road, as Mr. Krasting suggests that we most likely will, but there isn’t a lot of road left.
Oh no, there is plenty of road. Problem is the can is getting bigger exponentially. Soon it will be of such mass that it risks collapsing in on itself….
Which is why I just can’t take steve seriously when he talks about deficit reductions going forward.
These benefits are mirages and mind candy for people, but with no real management or substance behind them.
A greater number of people are applying for disability (something discussed in an earlier thread). So, hooking more up to a financial drip is basically a taking-from-Peter-to-pay-Paul scheme of the government, or playing musical chairs with imaginary money. It seems like the only remedies produced from government these days are to avoid immediate pain through short term, superficial solutions. The problems, though, are not going away by such a financial shuffle, only accumulating down the road — planning that will only ensure us of another crash in the near future. It seems that “Prevention” is just not in the government’s vocabulary.
I agree about raising the age SS age limit. With people living well into their 90’s these days, and anti-aging research always on the cusp of aiding and abetting people to have even longer lives, it is insane not to recalculate SS start times according to these new longevity stats.
So set SS benefits to something like Life Exepctancy – N years with N something like 10?
So set SS benefits to something like Life Exepctancy – N years with N something like 10?
Sounds so easy, doesn’t it? …..except when you try selling it to people who have 65 stapled on their forehead, while they forge ahead to 100.