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Editorial The Social Security Trust Fund Is Depleted

Before Washington, D.C.
Instead of passing trillions in new expenditure, Democrats should concentrate on bolstering the Social Security Trust Fund.
GOBankingRates polled over 1,000 people on six questions to see how well-versed they are in the ins and outs of Social Security.
(Getty Images) Before Washington, D.C.
Instead of passing trillions in new expenditure, Democrats should concentrate on bolstering the Social Security Trust Fund.
The Congressional Budget Office provided precise figures on its long-term Social Security predictions earlier this month.
It’s depressing — at least for those paying attention.
In 2032, the trust fund will be depleted.
The Disability Insurance Trust Fund is set to expire in 2035.
The financial concerns of Social Security are sometimes ignored as a matter for the future.
It’s time to put an end to your procrastination.
Social Security is a program that transfers resources from one generation to the next.
Recipients do not receive their own money; instead, they receive contributions from current employees.
The trust fund is a type of financial fictitious entity.
Excess Social Security taxes are supposed to go into a “lockbox” to pay for future liabilities.
The federal government, in practice, takes that money and replaces it with IOUs.
This might not be as concerning if the federal government was otherwise in good financial shape.
Nonetheless, the Congressional Budget Office predicted a $2.3 trillion deficit for this year in February.
The CBO also predicts that the government debt will surpass the US GDP this year.
a country’s gross domestic GDP
In the absence of adjustments, Social Security will contribute significantly to the debt over the next few decades.
“Over the following 75 years, the programs’ actuarial deficit would reach 1.7 percent of GDP, or 4.9 percent of taxable payroll,” according to the CBO.
One idea is to raise the income tax ceiling for Social Security, but this would destroy the link between individual contributions and benefits, potentially affecting political support for the program among wealthier people.
Benefit reductions could also be considered, but this is unlikely to be popular among younger workers.
Furthermore, any move in that direction should protect existing claimants and those approaching retirement age so that their financial plans are not disrupted.
According to the CBO, a 30% reduction in payments for future beneficiaries would necessitate a 36% reduction in benefits.
Waiting any longer aggravates the situation.
In 2032, a 33% reduction for all participants would be required, or a 45 percent reduction for future participants exclusively.
As entitlement expenditure grows as a percentage of the federal budget, lawmakers in Washington may be hesitant to approve trillions in new spending.
But, one would be mistaken.
Democrats appear hell-bent on ramming through a $3.5 trillion spending bill that could skyrocket inflation and the national debt.
As George W. Bush put it,
Bush discovered the hard way that the popularity of Social Security makes reform difficult.
Nonetheless, these figures demonstrate that reforms are required, and the sooner the better.

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