The Social Security trust funds are still on track to be depleted in 2035, the same as projected last year, with 76% of benefits payable at that time, according to the just-released Social Security Board of Trustees’ report.
The Federal Disability Insurance Trust Fund, meanwhile, is projected to be depleted in 2065, which is 13 years longer than last year’s estimate of depletion in 2052; 92% of benefits would still be payable.
The 2020 numbers do not account for the effects of the COVID-19 pandemic. “Given the uncertainty associated with these impacts, the Trustees believe that it is not possible to adjust their estimates accurately at this time,” according to a summary of the report.
But while the program is not going “bankrupt” or becoming “insolvent,” Social Security’s “long-term fiscal health cannot be guaranteed if the White House and Congress continue to use the program’s financing structure for economic stimulus during the COVID-19 crisis,” said Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, in a Wednesday statement.
A broad-based payroll tax cut, as President Donald Trump has proposed, “would interfere with Social Security’s traditional revenue stream while failing to deliver effective or equitable stimulus. Meanwhile, Social Security already provides more than $1.6 trillion in annual economic stimulus as seniors spend their benefits for essential goods and services in their communities,” Richtman said. “ Now is not the time — in fact, it is never the time — to tamper with a program that more than 40% of retirees rely upon for all of their income.”
Trump tweeted Tuesday that payroll tax cuts would be considered for the next stimulus package.
Another factor not accounted for in the trustees’ report: More than 22 million people have filed for jobless benefits since mid-March. But “it seems unlikely that a temporary uptick in unemployment would have a significant affect on Social Security’s projected revenue over the long term,” Webster Phillips, senior legislative representative for the National Committee to Preserve Social Security and Medicare, said in an email message.
Linda Benesch, spokeswoman for Social Security Works, said in a Wednesday email to ThinkAdvisor that Social Security currently has a $2.9 trillion surplus.
However, “if Congress takes no action between now and 2035, that surplus will be gradually drawn down. … Even after 2035 Social Security will still be able to pay around 80% of benefits because most of its funding comes from workers’ payroll contributions. Congress should take action, including raising the cap on payroll contributions, so that Social Security can continue to pay 100% of benefits after 2035.”
Nancy Altman, president of Social Security Works and the chair of the Strengthen Social Security Coalition, stated that “though the exact impact of today’s pandemic and economic conditions will not be clear until next year’s report, Social Security’s strength will shine through next year, as well. Social Security is built to withstand today’s events.”
Atlman just noted in Forbes that “Trump continues to demand that Congress enact an elimination of payroll contributions, which are Social Security’s dedicated funding.
“As a response to the coronavirus crisis, this makes no sense. It’s slow, inefficient and fails to get money into the pockets of those who need it most. The only reason to support this policy over better targeted, more efficient measures is if your true goal is to undermine Social Security and its self-funded status.”
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