At the request of Senators Larry Craig, (R-Idaho), chairman of the U.S. Senate
Special Committee on Aging, and Charles Grassley (R-Iowa) chairman of the Senate
Finance Committee, the General Accounting Office (GAO) has issued a chilling
report on the eventual exhaustion of Social Security.
The report, Analysis of a Trust Fund Exhaustion Scenario, is heavy on
‘what ifs’ but nonetheless paints a bleak picture of Social Security’s
future.
The GAO report assumes that the Social Security trust fund’s surplus will
begin a permanent decline in 2009, immediately after the first Baby Boomers
retire. Under the scenario requested by senators Craig and Grassley, benefits
would continue at their currently scheduled levels until the funds are exhausted.
Therefore, beginning in 2009, outgo would exceed income to the trust fund so
that "by 2018" the report says, "Social Security’s tax income
is projected to be insufficient to pay currently scheduled benefits."
This shift from positive to negative cash flow will increase pressure on the
federal budget. "If you look ahead in the federal budget," the report
says, "Social Security together with the rapidly growing health programs
[Medicare and Medicaid] will dominate the federal government’s future fiscal
outlook. Absent reform, the nation will ultimately have to choose between persistent,
escalating federal deficits, significant tax increases, and/or dramatic budget
cuts of unprecedented magnitude."
Sen. Craig suggests that critics of Social Security reform models, created
by President Bush’s Commission to Strengthen Social Security, have taken
a "do-nothing" approach to the problem.
"It is clear from (the GAO report) that if we do nothing," said Craig,
"Americans will face overwhelming challenges with Social Security in the
coming years–challenges that will mean heartache and misery for taxpayers
and senior citizens–and incredibly difficult choices for elected officials
of the future. It is clear to me that when it comes to Social Security, we must
act, and we must act within the next few years."
The GAO report is available online at http://www.gao.gov.
