Earlier this week we called your attention to Medicare's woes. Now a new report suggests that Social Security might be in the same boat.
The Daily Signal reports:
Here are five takeaways from the most recent financial report:
1. $41 billion cash-flow deficit in 2017.
Social Security is still considered solvent and able to pay full benefits because it has accumulated a $2.9 trillion trust fund, but since the entirety of its trust fund consists of IOUs, cash-flow deficits must be financed by general revenue taxes or new public borrowing.
Since 2010, the Old-Age and Survivors Insurance program has taken in less money from payroll tax revenues and the taxation of benefits than it pays out in benefits, resulting in cash-flow deficits.
2. $16.1 trillion in unfunded obligations.
The trustees report that Social Security’s unfunded obligation has reached $13.2 trillion. That’s the difference between what the program is expected to receive in income, and what it’s expected to spend over the next 75 years.
But this figure assumes that the $2.9 trillion in trust fund reserves are available to be spent. The problem is that these reserves represent liabilities for the U.S. taxpayer.
The payroll revenues have already been spent and the trust fund has been credited with U.S. bonds, which represent claims on the American taxpayer. So, the actual unfunded obligation is $16.1 trillion.
3. Insolvent by 2034.
Social Security is only legally permitted to spend more than it takes in until its trust fund is depleted. And, based on current projections, the Social Security Old-Age, Survivors, and Disability Insurance trust funds will be depleted by 2034.
When that happens, Social Security payouts will automatically be cut to the amount the programs will receive in revenues, regardless of benefits due at that time.
The $21 trillion national debt doesn't tell the whole story. The federal government is drowning in unfunded liabilities like Social Security and Medicare, and they have no plan to get themselves out.
Fortunately, the Founders gave the states a way to act when the feds are unable (or unwilling). An Article V Convention of States can propose constitutional amendments that force the feds to manage our nation's financial crisis.
These amendments can include a balanced budget amendment as well as amendments that cap taxation and, most importantly, limit spending.
