Wednesday, September 30, 2009

Social Security Insecurity: an Orchestrated Crisis

Social Security's Unexpected Deficits Show Urgent Need for Reform
Starting this year, Social Security will spend more in benefits than it will receive from its payroll taxes. This is somewhat unexpected as just last year, the 2009 cash surplus was predicted to be about $80 billion. Even in May of this year, the program's actuaries predicted a roughly $19 billion surplus. However, they failed to allow for the full effects of the recession, and the soaring unemployment both reduced tax collections and increased the number of workers who were forced to take early retirement.

This is very bad news for taxpayers, but worse is yet to follow. The 2009 deficit of about $10 billion will be followed by a 2010 deficit of about $9 billion. If there is a strong recovery--which is questionable at best--the program could briefly return to surpluses. But by 2016, deficits will return and continue permanently. A far more likely scenario is that Social Security will run deficits from this point on.

The Reality of the Trust Fund

These deficits do not mean that benefits will be cut, but they do increase the burden on taxpayers to pay them. On top of the $1 trillion-plus deficit predicted for this year to pay for the Obama Administration's programs, taxpayers will have to find still more money to pay Social Security's deficits. [...]

This article and the following one make the claim that high unemployment is forcing people to take early retirement:

Social Security strained by early retirements
WASHINGTON (AP) - Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.

The deficits - $10 billion in 2010 and $9 billion in 2011 - won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn't expect the increase to be so large.

What happened? The recession hit and many older workers suddenly found themselves laid off with no place to turn but Social Security.

"A lot of people who in better times would have continued working are opting to retire," said Alan J. Auerbach, an economics and law professor at the University of California, Berkeley. "If they were younger, we would call them unemployed."

Job losses are forcing more retirements even though an increasing number of older people want to keep working. Many can't afford to retire, especially after the financial collapse demolished their nest eggs.

Some have no choice. [...]

Where we live, there are plenty of jobs that nobody wants to do. At our local supermarkets, the "bag boy" is often a senior citizen old enough to be my mother or father. I've noticed a lot of jobs that used to be done by teenagers when I was a teenager, are now being done by seniors.

I did a post recently about working seniors. I think that those that have to keep working, take whatever they can get. Still others take what they can get, because they want to keep working.

As for these growing numbers of people taking early retirement, I have to wonder how many of them are doing so now, because they are afraid that if they wait, they won't get anything by the time they do retire?

It's obscene that our government is trying to create a massive new health care bureaucracy, when we don't even have the money to fund Social Security. If they can't manage existing government programs, what business do they have creating new ones? Yes we need health care reforms, but if they aren't sustainable, what is the point? To destroy what we already have, in order to orchestrate a crisis? To sabotage our government and economic systems, causing them to fail by deliberately overloading them, so they can then be replaced with something else?

No comments: