Don't forget that the government -- the non social security part -- has expenditures well in excess of revenues RIGHT NOW. Dick Cheney apparently thinks cash flow deficits that have to be financed by issuing tons of debt don't matter, but cash flow deficits than can be financed by drawing on the interest from your stock of existing assets are a real problem ... interesting financial logic.Also, here's the Trustees Annual Report, and the CBO Report.
In 2018, social security won't be able to lend its surplus to the rest of the government, and the rest of the government will have to adjust. That is a problem if you don't like the income tax, because the rest of the government is financed largely by the income tax. Income taxes have to rise, or non-social security spending will have to fall. But so long as the US government is not planning on defaulting, it is not a problem for social security. The payroll tax does not need to increase in 2018, retirement benefits do not need to be cut, there is no problem, let alone a day of reckoning. The Treasury just has to start paying interest on all the bonds social security has bought ...
Monday, January 03, 2005
More Social Security stuff
I'm not really in much of a commentin' mood, but these items are SS-related. In the first, Brad Setser makes note of how silly the notion is that Social Security will be out of money by 2018: