Blind supporters of Social Security are fond of saying that the program is running a surplus; that simply is not true. Before 2010 the incoming payroll taxes exceeded what was needed to pay benefits; that was a surplus because the extra money could be and was invested to grow with interest.
Today, every penny of taxes, including income taxes paid on Social Security benefits and payroll taxes plus a portion of the interest on the earlier invested surplus is used to pay benefits. The amount of interest needed each year is growing and in about eighteen years that will be insufficient to pay the Trust’s obligations and the trust will be exhausted.
Now according to the Associated Press the Trump administration is toying with the idea of changing the funding of Social Security and instead of using payroll taxes, use other general forms of revenue. Changing the fundamental relationship between individuals funding the program and their benefits is a bad idea. It would throw the program farther into the rhelm of general entitlements and risk future politicians playing budget games with the funding.
Americans need to know how the benefits they want are paid for and not be lulled into the notion that somehow their retirement income is largess from this entity called “government.”
There is nothing wrong with the current funding approach except that it is inadequate to meet the promises made and the changing demographics facing America. These are facts Congress has known for more than a decade and has done nothing about it.
Social Security can be made sustainable relatively easily and painlessly if Congrees would come together and do something.