Social Security
Calendar Year 2011
Income:
Payroll taxes $ 691 billion
Interest 114 billion
Total Income: $ 805 billion
Expenditures: < 736> billion
Surplus: $ 69 billion
Trust Fund:
end of 2010 $ 2.01 Trillion
end of 2011 $ 2.70 Trillion
This is a brief summary of the Social Security Trust Fund - more commonly referred to as the "Old-Age, Survivors, and Disability Insurance" (OASDI). The Board of Trustees, as established by the Social Security Act, is comprised of six members: the Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services, the Commissioner of Social Security and two members appointed by the President with Senate Confirmation. This Board is required to report annually to Congress on the actuarial status and financial operations of the OASI and DI Trust Funds.
At the end of calendar year 2011, the OASDI program was providing monthly benefits to about 55.4 million people: the OASI Trust funded 44.8 million and the DI Trust Funded 10.6 million.
On face value, it does not appear the Social Security Trust fund is in immediate danger of going broke. The fund took in $805 billion and spent $736 billion leaving a $69 billion surplus to be added to the Trust Fund Assets which amounts to more than $2.70 trillion. As summarized by the Board of Trustees, the huge influx of "baby-boomers" coupled with lower birth rate of potential workers and the fact beneficiaries are living longer will require changes to funding of Social Security involving higher taxes and/or increases in the qualifying age limit. Even so, the financial status of Social Security is not catastrophic leading us to question Speaker of the House John Boehner's assertion that "Entitlements" should be included in the so-called "Fiscal-Cliff" cuts. So what is the "real" problem which, apparently, Mr. Boehner is reluctant to identify?
To begin with, the Board of Trustees has acknowledged the Department of the Treasury has "invested" the $2.70 trillion surplus assets in interest bearing securities of the U.S. Government and the trust fund assets earned 4.4 percent annual interest. 4.4% interest in the current market is acceptable; however, so-called investments in securities backed by the full faith and credit of the U.S. Government, which has a national debt exceeding $16 trillion, appears ill advised.
The real problem is the Social Security Trust Fund has no actual cash because several generations of political leaders replaced all these funds with Treasury notes and IOU's. Accordingly, any need to draw money from surplus assets would require more government borrowing of funds to pay for the funds already borrowed - or, raising taxes which would result in Social Security benefits being taxed twice.
Obviously, the Social Security system can be salvaged by outlawing government borrowing of the funds and instead making investments into financial instruments which do not require raising taxes to pay back the borrowed funds.
Clearly, this nation is faced with a "Fiscal Cliff" because of its huge $16 trillion National Debt but it does not appear as though Social Security is part of that problem!