2016 Social Security Trustees’ Report

The Social Security Trustees’ report for 2016 has been published. The Washington Post reports that it bears good news and bad news:

The trust fund used to pay hospital insurance costs for Medicare will be wiped out two years earlier than expected, according to a government report released Wednesday.

The report also showed that the Social Security trust fund has enough cash to pay full benefits for another 18 years, the same timeline as last year, the Treasury Department said Wednesday. In the latest annual check-up on the two largest entitlement programs, the trustees overseeing both Social Security and Medicare said additional reforms are needed in order to avoid cutting health care and retirement benefits for American retirees.

“Social Security and Medicare remain secure in the medium-term,” said Treasury Secretary Jack Lew. “Nevertheless, future solvency challenges for both programs remain.”

The report itself is here.

If you’re wondering what the good news is:

In one bright spot of the report, the fund used to pay benefits for people with disabilities — which was set to run out of funds by the end of this year — should last at least through 2023. Congress made changes last year that directed more cash to that part of the program by reallocating money from the trust fund used to pay benefits to retirees and survivors.

A number of years back I wrote a series of posts on Social Security and a lively discussion ensued. I may try to dig them out. As I recall everything I said at the time is more obviously true than it was then. It’s clearly impossible for ordinary people to save enough for their own retirements. When you’re getting .75% interest on anything remotely secure?

I have a pretty distinctive take on Social Security. Not only do I think that the program will remain more or less intact for the foreseeable future, I think that its primary problem isn’t that there aren’t enough people contributing as that not enough income is subject to the tax.

The last thing we need is a big influx of people earning minimum wage and lining up for benefits on down the road.

Whether we continue with the bizarre fund accounting is another question. So DI has six years of life, Medicare has 11, and SSRI has 18. Get used to this being the big topic for the next several administrations. I love the smell of napalm in the morning!

What we really need is more robust economic growth. Care to make a small cash wager on whether we’ll have another “lost decade”?