Social Security. It’s back in the news and back on people’s minds. In a NY Times story, this year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the CBO.
This is Stephen Goss, CEO of Social Security Administration:
The problem is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.
Everybody got that? Goss emphasized that even the $29 billion shortfall projected for this year was small, relative to the roughly $700 billion that would flow in and out of the system. The system, he added, has a balance of about $2.5 trillion that will take decades to deplete. Goss said that large cushion could start to grow again if the economy recovers briskly. Or, before we hit zero let’s think of a long-term plan. How about that government? Let’s plan ahead!
*UPDATE – The NY Times has some contributors offer suggestions.