Social Security and Bankruptcy: The Political Third Rail Rises Again
By Marion Edwyn Harrison, Esq.
Nov 10, 2008
Will the incoming Administration have the courage and foresight - indeed, the present sight - to attempt what the last several Administrations have failed seriously to attempt? In sum, will it seek to save the Social Security System? The Iron Chancellor, Prince Otto von Bismarck, and President Franklin Delano Roosevelt understood numbers and applied reality. Social security became effective at the age of average life expectancy, thus substantially limiting the number of people who ever would collect. This Commentary posted on December 16, 2004 recites some history and relevant facts, text following this update.
Social Security and Bankruptcy: The Political Third Rail Rises Again
The General Accountability Office (“GAO”) is recognized for its objectivity and thoroughness. GAO has released current estimates upon the fate of our Social Security System, beginning with a 2008 development. At best, these figures are scary to everyone who looks forward to living to the prevailing longevity, generally said to be about 82 years, or indeed even looks forward to a lesser age beyond 65.
This year, 2008, so-called Baby-boom folk (those born 1946 - 1961) are commencing to draw Social Security payments. That alone may raise no alarm. The other fact is a loud alarm - namely, this year expenditures for Medicare hospital insurance exceed cash income.
The year 2011 will see two more dangerous manifestations. The oldest baby-boomers will become Medicare-eligible. Simultaneously the Social Security cash surplus will commence to decline.
The next hit is projected for 2017. Payment of money to recipients, commonly referred to as “benefits,” will exceed income.
Not surprisingly, it won’t take long thereafter before the Medicare Hospital Insurance Trust Fund will run dry - estimated for 2017.
In about 2026 the youngest baby-boom people, by then 65, will become eligible to draw Social Security payments.
But for how long will they or any other beneficiary draw? Five more years. In 2041 the Social Security Trust Fund will be an historical illusion - that is, penniless.
Marion Edwyn Harrison is President of, and Counsel to, the Free Congress Foundation.
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