The year 2035 may seem like a long way off. But so, at one time, did 2019.
The national unemployment rate is low a miraculous 3.8 percent because the national economy is thriving.
Just how pretty is this countrys economic picture? New numbers from the Bureau of Economic Analysis show that the gross domestic product grew by 3.2 percent in the first three months of the year, well above the 2.5 percent predicted in a poll of economists conducted by Dow Jones. That was the best three-month start for a year since 2015.
People always feel better when theres money in their pockets and, for now at least, economic times are good and expected to remain so for a while before the next inevitable downturn.
But pictures are never perfect, and recent news reports about the financial health of Social Security raises real concerns.
The good news is that theres time for our legislators in Washington, D.C., to address challenges Social Security faces. The bad news is that legislators have shown no inclination to take action on Social Security in the past, preferring to wait until the wolf is at the door.
Trustees who oversee the Social Security program report that the programs reserves will be depleted by 2035. That doesnt mean the system will be bankrupt.
But it does mean that, with reserves exhausted, Social Security payments by working Americans will only cover roughly 80 percent of scheduled benefits.
This is not the first time that Social Security has faced funding issues. When President Ronald Reagan was in office during the 1980s, he and the Congress oversaw substantial increases in Social Security taxes and some program cuts that restored the program to good health.
But that was a long time ago, and another round of fixes are in order. The question is what they will be and when Congress will get around to implementing them.
Pressure on the system comes from the aging of the so-called baby boomers. By 2030, every member of that generation will have reached retirement age. Indeed, the Census Bureau estimates that one of every five U.S. residents will be at least 65.
The 2019 Trustees Report projects Social Securitys cumulative surplus to be $2.9 trillion, according to Social Security Works. The report shows that Social Security is fully funded until 2035, 93 percent funded for the next 25 years, 87 percent funded over the next 50 years, and 84 percent funded over the next 75 years.
The obvious solutions to the problem include raising Social Security taxes, cutting benefits or some combination of the two.
Unfortunately, legislators have never shown much appetite for reducing benefits once they are given. At the same time, theyre reluctant to raise taxes. Those two realities account for the obvious lack of interest in taking action.
Following are some of the tax numbers Social Security trustees included in their assessment of the program.
They said that the programs finances could be fixed for 76 years with a 22 percent increase in payroll taxes paid by roughly 175 million workers and their employers if Congress acts now.
Waiting until 2035 would require a tax hike of 29 percent.
But thats not as easy as it sounds. The more employees pay in Social Security taxes, the less money they have to spend on themselves and their families. The more employers have to pay for their employees Social Security, the less money they have to give employees pay raises or reinvest in their businesses.
Of course, the law could be changed in a way that would impose a means test on Social Security recipients. After all, do well-off retirees really need a check from the government to get by when the system is going bust?
Proposals for changes are all over the lot. Unfortunately, theres far more interest in talking about problems facing Social Security than doing anything about them.