Although some consider that Social Security should not be apart of the federal budget, doing this would make cuts for Social Security only large enough to close its own deficit. Will this approach lead to fewer or more Social Security cuts?
Saturday, November 27, 2010
The Social Security Deficit
This article discusses how the government pays Social Security benefits with the revenue collected from the payroll tax. Not all the money is used, so the extra money is put into a trust fund that earns interest. Each year, the government will begin paying more in benefits than it collects in taxes each year. The tax revenues will surpass the programs costs in 2012 through 2014 before falling below in 2015. With Social Security building surplus over the years, it will be able to cover until 2025 with all the interest it has earned over the years on the trust fund.
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Yeah, and other studies can support the problem of the shrinking Trust Fund of Social Security Payment to the elders. Basically everything boils down to the increasingly larger portion of the elders in the adult populations - the aging Baby Boomers and the new generation's slow-growing population. The growth in payroll taxes will have to be significantly higher in order to ensure the sustainability of this Trust Fund - which is highly unlikely. That's why we see many advices for our generation to start saving on our own - this will also help partly this puzzle for the Government.
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