With Friday’s announcement by the trustees of the Social Security Administration that “reserves are still growing and will continue to do so through [the year] 2020,” it didn't take long for groups like Strengthen Social Security (SSS) to chortle that not only is Social Security “fully affordable and structurally sound, [but it] will meet all its obligations to the American people as far as the eye can see.”
That works only if the eye can see out to the year 2020 and not beyond. SSS added: “Social Security’s cumulative projected surplus will be roughly $2.8 trillion in 2013 and [will] continue to grow until it reaches about $3 trillion around 2020.” This is, according to SSS, “the result of decades of foresight and planning.”
Unfortunately, buried in the trustees' report are two unsettling facts that SSS ignored altogether. First, the Disability Trust Fund under Social Security will be out of funds in three years, forcing beneficiaries to take at least a 20-percent cut in their benefit checks. Second, after the year 2020 the highly touted “surplus” drops to zero in 2033, forcing everyone receiving a check to take a “haircut” of at least 25 percent, if not more. Under the trustees' “high cost” scenario, totally ignored by SSS, Social Security will be out of funds by 2026, a scant 13 years from now.
By taking a longer view and broader view, however, Boston University economics professor Laurence Kotlikoff calculates that the difference between the government’s promises and its revenues, discounted to present value, is $222 trillion, or nearly 14 times the country’s gross domestic output. He points out that most people don’t know that the difference is that large because so many of those promises are kept off the books and consequently are not counted when the national debt is calculated:
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