Social Security, the Wrong Retirement Crisis

President Bush has been working hard to promote belief in a Social Security crisis. Unfortunately for him, the numbers refuse to cooperate. The latest numbers from the Social Security trustees show that the program can pay all scheduled benefits through the year 2042 with no changes whatsoever. An independent assessment from the non-partisan Congressional Budget Office (CBO) shows that the program can pay all benefits through the year 2052. Even after these dates, the projections from both the trustees and CBO show that the program will always be able to pay a higher benefit than that received by current retirees, although not the full scheduled benefit. Furthermore, sets of projections tell us how much money would be needed to keep the program paying full scheduled benefits through the program's seventy-five year planning period. The trustees estimate the size of the gap as 0.7 percent of GDP over this period, while CBO puts the gap at just 0.4 percent of GDP. By comparison, the cost of the Bush tax cuts is approximately 2.0 percent of GDP, with the richest 2 percent of families collecting an amount equal to 0.8 percent of GDP. Looking historically, if one had accurate projections for the future, Social Security would have appeared in much worse shape in the decade of the fifties, sixties, seventies, and eighties, all decades in which the program needed immediate tax increases. In short, if Social Security is facing a "crisis" today, then it has faced a crisis for most of its seventy years of existence. [more]