Tornado Alley (PROG)

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Social Security update

The trustees of the Social Security trust fund just released their annual report.

In brief, the Soc Sec trust fund has a $2.8 trillion surplus, which is a significant increase over last year.

The main Soc Sec retirement trust fund will be able to meet 100% of its obligations for the next 19 years, up until 2033. After that, it will meet 75% of its scheduled obligations until at least 2088. There is obviously plenty of time to tweak the money coming into the fund to ensure its permanent stability.

The disability fund is in not quite so good shape. It will meet 100% of its obligations until late 2016, and 80% of its obligations thereafter. A legislative fix is required quickly. Fortunately, what is needed is easy to accomplish (numerically easy anyway – politically, it may be more of a lift, although with Baby Boomers retiring in increasing numbers, and also increasingly needing disability assistance, there will be enormous pressure to fix it).

The Medicare Trust Fund will cover all its obligations also up until 2030. The Affordable Care Act added thirteen years to the lifespan of the Medicare Trust Fund. (This is one of the reasons conservatives hate the ACA.) After 2030, the Fund will continue to meet 85% of its obligations, a number that slowly declines to 75% in 2050 and thereafter.

Medicare Part B (which pays doctors’ bills and other supplemental costs) and Part D (prescription drugs) will remain solvent forever, because current law automatically transfers money to these programs to cover their obligations. The amount needed will continue to increase however, unless we get society's medical costs under control. This last point exists whether these costs are funded through Medicare or not. Either way, Americans have to pay these costs. Medicare has proven to be the most efficient way to do it. One way to dramatically reduce the costs of Part D would be to allow Medicare to negotiate prices with drug companies.

As I said, fixing the projected shortfalls would be simple. One way to do it would be a minor annual increase in the FICA tax, of about 0.08% of gross income every year between now and 2030. This would increase the tax from about 6.2% of gross income to about 7.5% (and employers pay matching amounts).

Another way would be to remove the income ceiling on contributions, so that all income is subject to the tax, instead of income only up to $117,000. This change would also make both Social Security and Medicare solvent forever.

So these programs would be simple to fund forever, without decreasing benefits in any way, and other than for the Soc Sec disability fund, there is plenty of time to do it. Don’t let anyone tell you differently.
http://www.dailykos.com/story/2014/07/28/1317332/-Social-Security-update