The Social Security Administration has released the yearly forecast of the program’s long-run finances. Jut like I did in 2023, 2022, 2021, 2020, etc, it’s time to see what to expect in the future.
Based on the annual fiscal data in Table VI.G9 (which is adjusted for inflation), we can see that the fiscal burden of Social Security is expanding rapidly.
The spending burden is growing faster than the tax burden, which means ever-growing levels of red ink.
As I show in this next chart, annual deficits eventually will climb above $1 trillion and the total shortfall over the next 75 years is more than $61.7 trillion.
Sadly, neither Joe Biden nor Donald Trump are willing to address the program’s huge fiscal problems.
This is a matter of math, not ideology. The Washington Posteditorialized yesterday about their head-in-the-sand approach.
President Biden and former president Donald Trump don’t agree on much, but both have pledged not to touch Social Security benefits. …Financial reality, though, is that if the programs aren’t reformed, and run out of money to pay required benefits, cuts could become unavoidable. …The 2024 campaign is probably not going to feature much honest debate about this, but the conversation has to happen sooner or later. Saving Social Security and Medicare requires reform. …These won’t be popular or painless, but, as even dithering lawmakers often admit privately, the longer change is postponed, the more painful it will be in the end. Or, as the trustees’ report puts it, “significantly larger changes would be necessary if action is deferred.”
Kudos to the Washington Post for acknowledging the problem. That’s good news.
The bad news is that the editors think massive tax increases are the way to fix the problem.
The transition to such a system would not be easy, especially since we have been kicking the can down the road. But Australia, Chile, Switzerland, Hong Kong, Netherlands, the Faroe Islands, Denmark, Israel, and Sweden show that it is possible to fully or partially replace debt-based systems with savings-based systems.
Dan Mitchell is co-founder of the Center for Freedom and Prosperity and Chairman of the Board. He is an expert in international tax competition and supply-side tax policy.
