Social Security Trust is going to take a hit

Job loss, furloughs, salary cuts, increased claims for disability, forced early retirement … during the Covid-19 crisis all these factors will either cut the Social Security Trust payroll tax revenue because of lower taxes being paid or accelerate claims for benefits.

For decades Congress has ignored the declining fiscal status of the Social Security Trust, now the year in which the Trust is exhausted may be accelerated by two years to 2032.

Twelve years is not a long time and the longer changes are delayed, the more drastic the changes required … but you’ve heard all that before. With Congress distracted with the pandemic and upcoming elections action on Social Security is unlikely for years to come. 😢

4 comments

  1. Before we make structural changes, we need the experts to separately estimate the impact on SS liabilities regarding COVID-19 disabilities and deaths among older Americans. One has to think that there will be a major impact on long term liabilities … if we do suffer 100,000+ deaths, mostly among older workers, and if a disproportionate number of older Americans end up claiming early, reduced SS benefits due to exhaustion of unemployment insurance.

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  2. Easy solution. Automatically adjust FICA income ceiling to meet actuarially calculated obligations. All Defined benefit plans do this. There are lots bigger things for our government and it’s citizens to be concerned about.

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    1. That’s one option likely to lead us down the path of changing Social Security into more of a welfare system – removing the link between taxes and benefits. Those who consistently earn at/above the wage base, and who complete a full 35+ years of paying taxes, are those who receive the smallest benefit, relative to their tax burdens. I’d rather solve any funding shortfall with a specific tax – with specific targeting as needed. I would prefer to avoid changes that dissolve the relationships that have been mostly in place across generations, and members of the population.

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  3. The question is will anybody notice since all forms of taxes being collected will be down at least 8% for each month this pandemic goes on. Local, state, and federal expenditures are far exceeding the monthly income. Programs and projects will be cut and taxes raised to cover the shortfall over the next few years. Against that backdrop, the politicians will falsely assume that they have 12 more years to fix the problem. They will be busy putting out the financial fires resulting from the coronavirus and they will not want to raise social security withholding and face elections and they inflict the pain of the current needed bailout.

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