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Archive for Monday, September 28, 2009

Social Security hurt by employment losses

September 28, 2009

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— 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.

Comments

SettingTheRecordStraight 5 years, 2 months ago

"Social Security has accumulated surpluses from previous years totaling $2.5 trillion."

Here's what that means: The government has over-collected Social Security taxes over the past 75 years by a whopping $2.5 trillion. Instead of government refunding that money or saving that money, government has spent every nickel of that money it every single year. Sure, Congress has stamped "IOU" on the $2.5 trillion, but that's a joke. The money's not there.

Now the really bad news. By 2017, Social Security will collect less in taxes than it pays out. At that point, Social Security becomes insolvent (although, at least there won't be any more surpluses for the government to squander).

It's time to allow younger workers to either opt out of Social Security or start contributing part or all of their SS taxes into a 401k/403b/pension system. To do anything less is to guarantee that our children and grandchildren will collect nothing from Social Security.

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