Social Security's trustees today delivered altogether unsurprising news: the program's trust funds are moving toward exhaustion at an accelerating pace. But the trustees also delivered a two-pronged message alongside this news: Americans don't need to panic just yet, but lawmakers do need to act now.
Treasury Secretary Timothy Geithner stressed that the Social Security system can continue to provide full benefits for a considerable period of time. "The reports project that, when considered on a combined basis, Social Security's retirement and disability programs have dedicated funds sufficient to cover benefits for the next 20 years," Geithner said.
Yet Geithner also acknowledged trustees' more pessimistic outlook, citing a number of reasons for the darkening projections: longer life spans, a growing number of retirees, and lower real wage projections. He also urged the need for "a bipartisan solution that strengthens Social Security and does not hurt current recipients, slash benefits for future generations, or tie the program to the stock market."
According to the trustees' report, Social Security's Old-Age and Survivors Insurance and Disability Insurance trust funds combined are now expected to be exhausted in 2033, three years earlier than last year's projection. The disability fund is of more immediate concern, as it is now projected to be exhausted in 2016, two years earlier than last year's estimate.
Geithner's fellow trustees likewise stressed the need for legislative action to reinforce Social Security, but Social Security Commissioner and Trustee Michael Astrue also cautioned reporters not to frame exhaustion in too dire of terms. "After 2033, even if Congress does nothing, there will still be sufficient assets to pay 75 percent of benefits," he said.
There is considerable frustration over politicians' inability or unwillingness to address large problems like Social Security, Medicare and the rising national debt, says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan organization concerned with fiscal policy.
"There's no excuse for the delay that's gone on for years," she says. "There's a clear warning of a danger to come. It's not that we couldn't fix the problem; it's that we're losing faith in our politicians to fix the problem."
Social Security is famously dubbed the "third rail" of American politics, in that touching it is likely to cause political death. However, stresses MacGuineas, failure to implement changes will make for more painful choices down the road and also make for greater retirement uncertainty for Americans.
"We really should make [reforms] sooner rather than later, so that everybody knows what to expect out of the program and they can adjust," she says.
While lawmakers will surely delay corrective action, there is little dispute that Social Security is vital to the livelihood of a large population of Americans. As Secretary of Labor Hilda Solis pointed out today, the number of older Americans in poverty would increase by 14 million without Social Security.