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Social Security Crisis Financial Tsunami on the Way
Culture and Society Author: Elisheva Wiriaatmadja
Social Security Crisis Financial Tsunami on the Way
There is a growing debate between both fences of US legislators. Is the Social Security program contributing to the current budget deficit? There are speculations that White House needs to appropriate about $2.8 trillion on top of a current $14 trillion public debt just to make sure the Social Security continues to operate and provide benefits to the growing number of retirees and beneficiaries.

With a quick look at the issue, it is just easy to agree that indeed the Social Security could make the budget problem worse. But if you would look more thoroughly, carefully, and analytically, the Social Security does not need any cash infusion from the federal government. That is if the program's Trust Fund has not been used to fund several of the controversial and costly endeavors of the past administrations.

From the years 1984 through 2009, working Americans have contributed about $2 trillion to the Social Security and Medicare. If interest would be applied to the amount (just like if it was invested wisely), the total payable of the government to the Social Security Trust Fund would be about $2.8 trillion.

Workers' contributions

Through thick and thin, monthly pay checks are being slashed by up to 15% to fund health and pension benefits. People have no choice; such contributions are forcibly and automatically deducted from their wages before those pay slips are even printed and handed out.

Now there is a proposal to put the Social Security program on the chopping board. It is clear that this proposed trimming would help balance the presently tightening federal budget. But would it be fair? Logically, it would be far from that. Why would retirees be deprived to reap the fruits of their labor? They have patiently endured compulsory contributions to the program all those years so they could make sure their retirement years are secured.

After a harsh financial crisis that hit the US in the last few years, it is expected that the volume of enrolls to the Social Security would further grow. Moreover, the number of retirees is set to expand as the baby boomer generation starts to get into the legal retirement age. However, current contributions to the program could grow smaller, following the impact of the economic crunch.

Need for reforms

The Social Security system also needs to implement reforms. According to analysts, even if the federal government now returns the money it borrowed from the program's Trust Fund, Social Security's reserve would still eventually dry out. We could blame it on the current formula being used in calculating actual growth of benefits/payouts over time. Thus, there would be an eventual necessity to increase payroll tax and make the program dependent on collections or revenues.

It is dreadful how the US would end up if its current budget deficit remains unresolved. But it is even more dreadful and unjust to see American retirees getting less or nothing out of their Social Security. Meanwhile, calls are growing to slash appropriations on things and items that the government should not spend much on rather than to cut benefits that Social Security pensioners and beneficiaries rightly deserve.
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