Donald Trump and Kamala Harris have two things in common. Both promised to keep Social Security “safe.” Neither said anything about how they would do it.
But don’t worry, be happy.
We shouldn’t worry our pretty little heads about it, right?
Wrong. This is a question that deserves real answers, not glib assurances. Let me explain why.
Hyperbole Gets Us Nowhere.
Promises of safety and declarations of disaster are equally useless. Specifics are a good starting point because Social Security is all about the cash. The cash coming in from taxes. And the cash going out for benefits.
According to the most recent Social Security Trustees’ report, for instance, payroll taxes, taxation of benefits and net interest on trust fund holdings brought in a total of $1,118.1 billion in 2020. During the same period, total costs (mostly benefits) total a bit less, $1,107.2 billion. So, a tiny surplus was added to the trust fund. It brought the total assets of the fund to a whopping $2.9 trillion.
That’s enough to run the program for nearly three years just from trust fund assets. That sure sounds “safe,” right?
Well, yes and no.
It’s a “woulda/coulda” situation. It would have been safe if our government, under both parties, could have controlled spending and resisted tax cuts. But it didn’t.
The Devil in the Details.
Unfortunately, $76.1 billion of Social Security’s income in 2020 was interest on trust fund holdings. That’s not cash. It’s an accounting entry. On a cash basis the program was short about $65.2 billion.
Still, no biggie.
In Washington, numbers in the low billions are rounding errors.
The real problem here is that 2020 was a good year. Since then, more people have retired, and benefits have increased with inflation. Employment tax revenue has risen, but it hasn’t kept up. The resulting cash deficit rose to over $108 billion in the 2024 report. To provide that cash, the Treasury must borrow more money from the public and from foreign investors.
At some point, lenders will just say no. When will that happen? Who knows? But we’re a lot closer to it today than we were just 20 years ago (see tabular display below).
The Future Is More of the Same, Much More.
In each annual report the trustees are required to project the finances of Social Security for the next 10 years. They produce “intermediate,” or most likely, estimates in addition to “high cost” and “low cost” estimates. Congress requires that the trustees make their estimates assuming no change in taxes, steady economic growth, and reasonable inflation and interest rates. The assumptions are consistent but pretty la-la-land.
Skeptics should consider the number of tax proposals currently under consideration, not to mention an economy running a $1.83 trillion deficit with an unemployment rate of only 4.1 percent.
Even so, in 2028 (the next presidential election) the projected decline in trust fund assets is $213 billion and $61.4 billion in credited trust fund interest, nearly $275 billion. By 2033 the cash shortfall is projected to be about $360 billion. The trust fund itself will be down to $551 billion, enough to cover only a few months of committed benefits.
The high-cost projections, which have tended to be closer to real-world results, show the trust fund being exhausted by 2032. That very likely means we have one presidential election and, maybe, two mid-term elections to demand real answers, not bland assurances, about how the program will provide security for retired and disabled workers.
It’s Only Hopeless If We Give Up Hope.
If you are one of the millions of voters who is intimidated by glib talk in billions and trillions, I’d like to make a suggestion – visit an online tool, as I did last year, that will help you puzzle through a basket of proposals that will change the financing of Social Security. None are radical. All are incremental. The tool is called “the Reformer.” You’ll find it on the Committee for a Responsible Federal Budget website.
We can make Social Security safe. But, regardless of political party, we need to make it clear: If those who purport to represent us don’t take clear positive action, we will replace them with people who will.
In God and Cash We Trust |
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| This table compares trust accounting, which includes interest accrued to the Social Security trust fund, with cash accounting, which includes only cash received. Data is from Table IV.A3. of the 2024 Social Security Trustees’ report and ignores RRB interchange adjustments, which are minor. The cash accounting deficits add to the amount the U.S. Treasury must borrow from the public and foreign investors each year. | ||
| Year | Trust Accounting | Cash Accounting |
| 2020-actual | ||
| Employment Tax Rev. | 1,001.3 | 1,001.3 |
| Taxation of Benefits | 40.7 | 40.7 |
| Net Interest | 76.1 | 0.0 |
| Total Revenue | 1,118.1 | 1,042.0 |
| Less Total Cost | 1,107.2 | 1,107.2 |
| Net | 10.9 | (65.2) |
| 2023-actual | ||
| Employment Tax Rev. | 1,233.1 | 1,233.1 |
| Taxation of Benefits | 50.7 | 50.7 |
| Net Interest | 66.9 | 0.0 |
| Total Revenue | 1,350.7 | 1,283.8 |
| Less Total Cost | 1,392.1 | 1,392.1 |
| Net | (41.4) | (108.3) |
| 2028-projected | ||
| Employment Tax Rev. | 1,487.4 | 1,487.4 |
| Taxation of Benefits | 90.7 | 90.7 |
| Net Interest | 61.4 | 0.0 |
| Total Revenue | 1,639.4 | 1,578.0 |
| Less Total Cost | 1,852.5 | 1,852.5 |
| Net | (213.1) | (274.5) |
| 2033-projected | ||
| Employment Tax Rev. | 1,865.1 | 1,865.1 |
| Taxation of Benefits | 132.8 | 132.8 |
| Net Interest | 29.2 | 0.0 |
| Total Revenue | 2,027.1 | 1,997.9 |
| Less Total Cost | 2,358.8 | 2,358.8 |
| Net | (331.7) | (360.9) |
| Source: https://www.ssa.gov/OACT/TR/2024/IV_A_SRest.html#126084 | ||
Related columns:
Scott Burns, “Can We Fix Social Security?” , 11/5/2023: https://scottburns.com/can-we-fix-social-security/
Sources and References:
Social Security Trustees Report 2024, Table IV.A3. Operations of Combined OASI and DI Trust Funds
https://www.ssa.gov/OACT/TR/2024/IV_A_SRest.html#126084
Committee for a Responsible Federal Budget, “The Reformer,” an Interactive Tool to Fix Social Security: https://www.crfb.org/socialsecurityreformer/
USDebtClock.org website: https://www.usdebtclock.org
Congressional Budget Office website, budget and economic data: https://www.cbo.gov/data/budget-economic-data#3
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo: Scott Burns, 6/6/2024, Scene along the Camino de Santiago
(c) Scott Burns, 2024