The picture of the current financial health of Social Security is more like that of Dorian Gray, ugly and corrupt while appearing to remain the same to those who rely on it.
The baby boom generation is only starting to retire and already there are less than two full time workers in the private sector for each retiree. Public sector employees usually have their own retirement systems, and are paid with tax dollars.
The temporary Social Security payroll tax cut forced the program to pay out more than it has received in the last two years – $45 billion in 2011, increasing to $165B in 2012, according to official data from the Social Security Administration.
The total number of Social Security beneficiaries — including retired workers, dependent family members and survivors, disabled workers and their dependent family members — hit a record in December, 56,758,185, up from 56,658,978 in November.
The Social Security Administration also disclosed that the number of workers collecting disability benefits hit a record 8,827,795 in December.
As reported by NewsMax, the Bureau of Labor Statistics reports there was an average of 112.5 million full-time workers in the United States in 2011, including 17.8 million who worked full-time for local, state or federal government. That leaves an average of only 94.7 million full-time private sector workers in the country.
That translates to 1.67 Americans working full-time in the private sector in 2011 for each person collecting benefits from the Social Security Administration.
When the Social Security program runs a negative net cash flow, as it has in the last two fiscal years, the program needs to “borrow” cash from the federal government. Since the government is $16.4T in debt, it prints more money and goes deeper in debt.
The program has to borrow the money because the government has already spent the funds collected from the contributions of the workers all these years and has instead placed nonnegotiable bonds as IOUs in West Virginia.
So, the trust fund is nothing but pieces of paper backed by the full faith of the U.S. government for what that is worth, with our government borrowing a minimum of 40 cents on each dollar it spends.
Unless the benefits are lowered or the eligible retirement age is increased, even the IOUs will run out in 2036 and benefits will be reduced to 77% of what they are now.
If you want to know what happened to the Social Security Trust fund read Forbes article, “What happened to the $2.6T Social Security Trust Fund?”
Social Security has a trust fund, and that trust fund is supposed to have $2.6 trillion in it, according to the Social Security trustees. If there are real assets in the trust fund, then Social Security can mail the checks, regardless of what Congress does about the debt limit.
Syndicated columnist Charles Krauthammer wrote a subsequent column questioning (Obama’s Budget Director, Jack Lew’s) assertions. “This [Lew’s] claim is a breathtaking fraud. The pretense is that a flush trust fund will pay retirees for the next 26 years. Lovely, except for one thing: The Social Security trust fund is a fiction. … In other words, the Social Security trust fund contains—nothing.”
And there is no mention of the debt ceiling in Jack Lew’s assertions – The truth is, “No Debt Ceiling increase – No Social Security payments” - as Obama and Geithner have both admitted during the last debt ceiling debate.