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Wednesday, Nov. 26, 2014

In our opinion: The long-term outlook for Social Security isn't good, so begin solving problem now

Deseret News editorial

Published: Mon, July 28 12:00 a.m. MDT

 The Social Security Administration's main campus in Woodlawn, Md.

The Social Security Administration's main campus in Woodlawn, Md.

(Patrick Semansky, Associated Press)

The Congressional Budget Office released its “2014 Long-Term Budget Outlook” this month, projecting Social Security and health-care spending to result in “unsustainable” federal deficits through the next quarter-century.

“Unsustainable” might be an appropriate term for the seemingly lackluster interest from Capitol Hill lawmakers, outside of Utah Republican Sen. Orrin Hatch and a few others. The report, stated Hatch, is a stark reminder of the urgent need for entitlement reform.

However disconcerting the spending and revenue projections are, they seem buffered by the timetable — worrying about federal finances in 2029 and 2039 is so distant and not that disturbing.

But the nonpartisan group said of its own report: “CBO’s extended baseline projections show a substantial imbalance in the federal budget over the long run, with revenues falling well short of spending.”

The following are summarized factors and predicted futures from the CBO report:

  • The federal debt is projected to reach 106 percent of the economy (gross domestic product, or GDP) in 2039, up from 73.8 percent projected for this year and 78 percent in 2024. That 106 percent is actually 4 points higher than last year’s CBO projections, given the slow economy.
  • By 2039, federal spending for Social Security, Medicare, Medicaid, the Children’s Health Insurance Program and subsides for health insurance purchased through exchanges created by the Affordable Care Act would be 14 percent of the GDP, as opposed to the 7 percent over the past four decades.
  • With increased spending on entitlements such as Social Security, major health-care programs and net interest payments, other federal discretional spending — infrastructure, education, defense and such – will drop to 7 percent of GDP in 2039, well below the 11 percent of the past four decades and the lowest share since the Great Depression.
  • Medicare, Medicaid and other health-care entitlements currently account for 4.8 percent of the GDP, and Social Security 4.9. Projected levels for 2039 are a whopping 8 percent for health care and 6.3 for Social Security.
Actually, the feds’ financial picture right now isn’t dire, given budget cuts and tax increases. The CBO projects a U.S. budget deficit of $492 billion this year, the lowest since 2008 and nearly a third of the record $1.4 trillion in 2009. But even the currently low deficit and projected healthy revenues won’t be enough to halt the anticipated rise in future deficits.

Also, Congress can’t continue to rob Peter to pay Paul, taking moneys out of one Social Security trust fund to prop up a like fund or another outside federal financial need. It only postpones the inevitable.

Americans are hesitant to see reductions in Social Security benefits. A recent Pew Research Center study shows 67 percent want no reductions at all in benefits, while 31 percent say future reductions should be considered.

In a 2012 AP/GfK national poll on Social Security’s future, 53 percent preferred maintaining current benefits by raising Social Security taxes, while 36 percent wanted to keep the tax rate as it is but reduce benefits for future generations.

While Congress has some tough decisions ahead: to substantially increase the economy, cut additional spending, raise taxes more, limit the growth of the entitlement programs or do a combination of several.

Whatever is done in the near-present may hurt the economy some and result in short-term pain. But continued procrastination only means greater pain in the long term.

Recommended
1. Mainly Me
Werribee, 00,
July 28, 2014

In my opinion: Social Security is a Ponzi scam and will crash of its own weight.

2. marxist
Salt Lake City, UT,
July 28, 2014

For social security the problem is the regressivity of the payroll tax. According to Senator Bernie Sanders we should apply the Social Security payroll tax on income above $250,000. Applying the Social Security payroll tax on income above $250,000 would only impact the wealthiest 1.3 percent of wage earners. In other words, 98.7 percent of wage earners in the United States would not see their taxes go up. The social security trust fund is solvent until 2030. Lifting the cap on taxable income would extend social security an additional 50 years.

Social security has been a winner and has rescued many elderly from abject poverty. Before social security it was a race to see which would kill off the elderly first - ill health or lack of nutrition.

3. JoeBlow
Far East USA, SC,
July 28, 2014

SS is a fairly easy fix.

1) delay benefits
2) increase taxes to cover it.
3) a combination of the 2 above makes the most sense

Medicare/Medicaid are much tougher problems.

Fixes include
1) reduce benefits
2) work to cut medical costs
3) raise taxes to pay for it

Of the 3 above, working to cut medical costs seems to make the most sense as cost are huge compared to the rest of the world.

All we need to do is convince about 1/2 of the country that medical costs need to be controlled.

The longer we wait, the tougher these problems become. And lately, all our congress HAS been doing is waiting and pushing the problem down the road.

4. Jeff Harris
Edmonds, WA,
July 28, 2014

Contrary to what Republican politicians hope we'll believe, most of us know that Social Security is an insurance that we working Americans pay for during our working lives, not an "entitlement" whatever that is. Republican attacks on it are the biggest threats Social Security faces.

5. pragmatistferlife
salt lake city, utah,
July 28, 2014

Social Security is one program that is absolutely vital to the health of the nation but also a program that one would expect would have to be "fixed" periodically with changing demographics and economic situations. It's impossible to see 50 years ahead so adjustments should be expected.

Luckily Social Security has some very easy fixes we just need the will to do so.