Distorting history and underestimating the severity of the problem only increases the chance of insolvency.
The Social Security system’s persistent and growing deficits are scheduled to bring trust fund insolvency within nine years, which would force a 23 percent benefit cut. Yet most lawmakers refuse to discuss solvency reforms because voters (and many lawmakers themselves) have fallen victim to common myths about Social Security’s finances.
Some myths are a matter of semantics, such as the notion that “Social Security is not an entitlement.” While those who make that claim are pushing back on the idea that the recipients are undeserving benefits are unearned, Social Security is legally classified as an entitlement because anyone who meets the eligibility criteria is legally “entitled” to their benefits with no annual congressional spending cap (at least until Congress decides to change the law). It’s just a budgetary term. Other fallacies distort past history or underestimate the severity of the problem. Here are the top 10 myths that are keeping us on the path to insolvency.
“Social Security cannot run deficits.” This is not true. In 2024, Social Security will collect $1.308 trillion in payroll taxes (and related revenues) and spend $1.459 trillion in benefits. The resulting $151 billion shortfall will be funded by deficit spending that contributes to the national debt. Because the Social Security system ran $3 trillion in surpluses from 1983 to 2009, it is legally entitled to run $3 trillion in deficits until these two figures balance out, which is currently expected to occur in 2033. In addition, the Social Security system receives annual interest payments from the Treasury ($62 billion this year), and in the past has received general fund transfers to pay for payroll tax relief—all of which contribute to budget deficits.
Continue reading the entire piece here at The Dispatch (paywall)
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Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here.
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