The Social Security Board of Trustees recently released its annual report on the long-term financial health of the retirement fund. The trustees found that the trust fund will continue to accumulate surpluses (payroll tax revenues exceeding outlays) through the year 2018.
Between 2028 and 2041 full benefits will continue to be paid, but this will require the gradual redemption of Treasury Bonds held in reserve by the trust fund. Unless obvious steps are taken to increase revenues the trustees anticipate that the reserves will be exhausted in 2042. At this time payments to recipients would have to be reduced to 70 percent of promised benefits.
Since the overall deficit in the trust fund is calculated by the Center for Budget and Policy Priorities as 0.7 of gross domestic product, or $3.7 trillion, over the next 75 years a modest increases in the payroll tax (borne perhaps by employers), coupled with a modest “infusion of funds from the non-Social Security budget,” could easily restore long-term trust fund solvency.
But the Bush administration will hear nothing of this. They have another agenda. Rather than shoring up Social Security or Medicare, which faces its own long-term deficit of around $5 trillion over the next 75 years, the Bush administration is repeating the mantra of privatization. Rather than provide for the retirement and health needs of seniors, Bush hopes to make the dreams of Wall Street come true through the creation of private retirement and medical accounts. This could potentially shift hundreds of billions of dollars from Social Security and Medicare into the hands of stockbrokers, whose recent record should be kept in mind.
According to Mark Weisbrot, of the Center of Economic and Policy Research, the current Bush proposal calls for diverting one-sixth of current Social Security revenues into private, individual accounts. The problem, of course, apart from the betting nature of the diversion, is that it reduces the flow of revenues into the Social Security trust fund, thus hastening the moment when the retirement cupboard is bare.
For the Bush wrecking crew that moment can’t come soon enough.
Instead of helping seniors, the Bush plan calls for giving substantial tax breaks to the already wealthy and waging endless wars to extend the frontiers of empire. With the help of some Democrats in Congress debt service will increase. What was once, not long ago, a rosy 10-year projection of a $5.6 trillion budget surplus has now been replaced with a 10-year projected deficit of $1.8 trillion. With the blank check given to the Department of War the projected deficit is set to leap. The economist and New York Times columnist Paul Krugman predicted that the 10-year deficit will soon reach $3 trillion.
According to Krugman, “Without the Bush tax cuts, it would have been difficult to cope with the fiscal implications of an aging population. With those tax cuts, the task is simply impossible.” The costs of permanent war make it doubly impossible.
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