Sunday, January 09, 2005
Maybe he should read the Times: Today's New York Times "Week in Review" section has a useful Q&A on the Social Security issue -- maybe Paul Krugman should read it.
Q. People are throwing around doomsday years for Social Security. Is it really running out of money?
A. Not any time soon. The system currently takes in far more in payroll taxes than it needs to pay benefits, and will keep doing so for years to come.
But eventually there will be a problem. People are living longer and baby boomers will start reaching retirement age soon, so the financial strains on the system are set to grow very sharply.
The first date to care about is 2018, when Social Security will probably begin paying out more than it takes in. But experts at the Social Security Administration have calculated that the system, by drawing on a trust fund that, on paper, is the recipient of today's surpluses, will be able to keep paying full promised benefits for another 24 years after that, until 2042.
The trust fund, though, is not cash in a bank. Successive Congresses and administrations have used the money to pay for general government spending, leaving the fund with nothing more than a promise to pay it back eventually. To make good on that promise, the government will have to reduce other spending, raise taxes or borrow more money. [emphasis added]
There you have it.