Thursday, March 25, 2010
The Economic Policy Institute (EPI) has taken exception to the popular notion that Social Security is going broke. In response to a recent Associated Press story, EPI’s Monique Morrissey pointed that the Congressional Budget Office—the source for AP’s dire account—has reported the trust fund for Social Security is actually still growing. It projects the fund to increase from $2.5 trillion this year to $3.8 trillion by 2020.
The confusion has developed because it is true that this year, for the first time, because 8,000,000 jobs have been lost, the fund will pay out more money in benefits than it will receive in payroll taxes. However, because Social Security gains interest income from Treasury bonds, total receipts are still larger than payments.
Still, the negative receipts/benefits balance came six years earlier than previously predicted, which does not bode well for the long-term health of the system.
- David Wallechinsky, Noel Brinkerhoff
Fact Check: Has Social Security Begun Tapping Its Trust Funds? (by Monique Morrissey, Economic Policy Institute)
Social Security to Start Cashing Uncle Sam's IOUs (by Stephen Ohlemacher, Associated Press)
Social Security to See Payout Exceed Pay-In This Year (by Mary Williams Walsh, New York Times)
Combined OASDi Trust Funds (Congressional Budget Office) (pdf)
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