Wednesday, March 23, 2005
Social Security 2005 Trustees Report Reinforces Need for Reform Now
Market Watch comments that Social Security shortfall seen sooner based on the 23 March 2005 release of the 2005 OASDI Trustees Report , which shows SS fiinacial crisis dates occuring one year earlier than last year's report.
The report estimated the program would begin to pay more in benefits than it collects in taxes in 2017. Social Security surpluses are currently used for general spending. The funds are replaced with special-issue Treasury bonds in the Social Security Trust fund, which is estimated to be exhauseted in 2041. Under law, Social Security would then have to cut benefits by an estimated 26 percent across the board to bring the system back into balance. The report estimated the trust fund's long-term funding gap would total $4 trillion over the next 75 years, up from the $3.7 trillion estimated over the 75-year horizon in last year's report.
"The numbers published today leave no question that Social Security reform is needed, and it is needed soon," said Treasury Secretary John Snow, in a statement. He also said the report : "once again demonstrates that the Social Security program is seriously under-funded and financially unsustainable in the long run. Cash flows peak in 2008 and turn negative in 2017, and the trust fund itself will be exhausted in 2041. .... The unfunded obligation, that is, the difference between the present values of Social Security inflows and outflows plus the existing trust fund, is $11.1 trillion on a permanent basis, and $4.0 trillion over the next 75 years. .... This means that taxes would have to be raised immediately by 3.5 percentage points, or benefits reduced immediately by 22 percent, to make the system whole on a permanent basis."
Market watch also notes that : "In other news the Senate Voted on the principles of SS reform :
By a vote of 100-0, the U.S. Senate passed an amendment to the budget resolution sponsored by U.S. Senator Lindsey Graham (R-South Carolina) that details the problems facing Social Security. Though the vote was largely symbolic, it was an important first step towards bipartisan support for reform.The amendment lays out the priorities for the Senate when it comes to discussing Social Security reform. The Senate agrees that:
* The President, Congress, and the American people including seniors, workers, women, minorities, and disabled persons should work together at the earliest opportunity to enact legislation to achieve a solvent and permanently sustainable Social Security system.
* Social Security reform must protect current and near retirees from any changes to Social Security benefits, reduce the pressure on future taxpayers and other budgetary priorities, provide benefit levels that adequately reflect individual contributions to the Social Security system, and preserve and strengthen the safety net for vulnerable populations including the disabled and survivors.
The resolution also notes (that) without structural reform, future Congresses may have to raise payroll taxes 50 percent over the next 75 years to pay full benefits on time or lower Social Security benefit levels."
The report estimated the program would begin to pay more in benefits than it collects in taxes in 2017. Social Security surpluses are currently used for general spending. The funds are replaced with special-issue Treasury bonds in the Social Security Trust fund, which is estimated to be exhauseted in 2041. Under law, Social Security would then have to cut benefits by an estimated 26 percent across the board to bring the system back into balance. The report estimated the trust fund's long-term funding gap would total $4 trillion over the next 75 years, up from the $3.7 trillion estimated over the 75-year horizon in last year's report.
"The numbers published today leave no question that Social Security reform is needed, and it is needed soon," said Treasury Secretary John Snow, in a statement. He also said the report : "once again demonstrates that the Social Security program is seriously under-funded and financially unsustainable in the long run. Cash flows peak in 2008 and turn negative in 2017, and the trust fund itself will be exhausted in 2041. .... The unfunded obligation, that is, the difference between the present values of Social Security inflows and outflows plus the existing trust fund, is $11.1 trillion on a permanent basis, and $4.0 trillion over the next 75 years. .... This means that taxes would have to be raised immediately by 3.5 percentage points, or benefits reduced immediately by 22 percent, to make the system whole on a permanent basis."
Market watch also notes that : "In other news the Senate Voted on the principles of SS reform :
By a vote of 100-0, the U.S. Senate passed an amendment to the budget resolution sponsored by U.S. Senator Lindsey Graham (R-South Carolina) that details the problems facing Social Security. Though the vote was largely symbolic, it was an important first step towards bipartisan support for reform.The amendment lays out the priorities for the Senate when it comes to discussing Social Security reform. The Senate agrees that:
* The President, Congress, and the American people including seniors, workers, women, minorities, and disabled persons should work together at the earliest opportunity to enact legislation to achieve a solvent and permanently sustainable Social Security system.
* Social Security reform must protect current and near retirees from any changes to Social Security benefits, reduce the pressure on future taxpayers and other budgetary priorities, provide benefit levels that adequately reflect individual contributions to the Social Security system, and preserve and strengthen the safety net for vulnerable populations including the disabled and survivors.
The resolution also notes (that) without structural reform, future Congresses may have to raise payroll taxes 50 percent over the next 75 years to pay full benefits on time or lower Social Security benefit levels."
