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American Voice 2004: Will baby boomers bankrupt social security?

| Written by David Morris | No Comments | Updated on Jun 1, 2004 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/will-baby-boomers-bankrupt-social-security/

Q.  In early January Toby Ziegler, the most liberal member of the liberal Administration of TV President Josiah Bartlett on West Wing announced the impending bankruptcy of social security as the baby boomers retire. A few weeks later Alan Greenspan, one of the more conservative real-life Chairmen of the conservative Federal Reserve System told Congress the same thing. Does this mean liberals and conservatives agree on social security?

Answer:

Social security is a complex issue. For a detailed discussion of its elements and the positions of both sides I encourage you click on our Issues and Allegations section.

The bad news is that on social security little bipartisanship exists today. The good news is that 20 years ago it did. Back in the early 1980s Congress recognized the strains aging baby boomers would impose on social security. Confounding those who think that government never seriously addresses problems before they occur Congress took decisive action! One result: today the social security trust fund boasts a huge and growing surplus. That surplus will be drawn down over the next several decades as baby boomers retire.

One good measure of the health of social security comes from the Social Security Board of Trustees itself. By law the trustees must issue regular reports evaluating the soundness of the social security system for the next 75 years. The Board bases its projections on very cautious assumptions about how fast the economy will grow. If the economy grows faster than projected, as has occurred virtually every year for the past decade, the year in which the fund will be unable to meet l00 percent of its obligations is delayed. As the table below reveals this occurs regularly.

In the 7 years from 1996 to 2003, the trustees have postponed by 13 years the time when the system will require additional funds. If the economy continues to grow faster than projected the trust funds may never need more money! Most observers dismiss this possibility. They believe reform is needed. But they disagree vehemently on whether it should take the form of an aspirin or major surgery.

Changes in Social Security Projections by the Board of Trustees

Report date 1996 1999 2000 2003
Year in which additional revenue will be needed 2029 2034 2037 2042