- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

Americans Have Every Reason to Doubt Social Security Solvency

Posted By Kathryn Nix On April 21, 2010 @ 12:00 pm In Economics | Comments Disabled

[1]

A recent poll by Rasmussen [2] shows that 58 percent of Americans lack confidence that they will receive their promised Social Security benefits in their entirety.  The poll showed just 13 percent feel very confident they will receive their benefits.

As usual, the sense of the American people is spot-on.  As the population ages, the cost to the federal government of running the Social Security program, which Americans workers pay into their whole lives, will skyrocket.  This trend is made crystal clear in Heritage’s recently published 2010 Budget Chart Book [3].  Social Security experienced red ink in 2009, and is on course to do so again in 2010—Heritage’s David John writes [4] that “If there is a strong economic recovery — which is questionable at best — the program could briefly return to surpluses. But by 2016, deficits will return and continue permanently.”

This is in addition to the record deficits Congress has been racking up in recent years, the trillions in unfunded obligations that exist due to the other two giant entitlement programs, Medicare and Medicaid, and the cost of running the rest of the federal government.  In short, the United States has set itself up for a fiscal crisis which, if left unaddressed, could lead to draconian measures for programs like Social Security.

Earlier this year, President Obama created the National Commission on Fiscal Responsibility and Reform to address the pending crisis which will result from massive entitlement spending.  The commission will offer suggestions to Congress on how to reduce deficit spending— this commission must come up with a viable strategy to reform these entitlement programs.  However, as many fear, it may instead try to focus on  minor spending tweaks and a massive tax increase like a VAT, which would have severe effects on economic growth.

Moreover, Rasmussen reports [2] that “[53] percent…of voters believe any changes to Medicare or Social Security should be approved by a vote of the American people”.   Under the President’s commission, this will not be the case: this commission must present its suggestions to Congress by the end of 2010, and Congress will vote on them soon thereafter.  Thus, even if voters express their will at the polls in November, the current Congress, not the newly-elected one, will vote on the commission’s deficit reduction strategy.

Congress must get serious about Social Security reform—hiding behind a weak commission is inadequate and unacceptable.  Rasmussen shows [2] that the American people support reform that would promote individual responsibility in retirement planning: 45 percent, a plurality, support the idea of allowing workers to opt out of Social Security, planning for retirement themselves.  Lawmakers should explore options that would reduce government-owed benefits and encourage increased retirement savings in order to save the program for generations to come, because, as David John puts it [5], “Social Security’s future has arrived early.”


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/04/21/americans-have-every-reason-to-doubt-social-security-solvency/

URLs in this post:

[1] Image: http://www.heritage.org/budgetchartbook/social-security-spending

[2] A recent poll by Rasmussen: http://www.rasmussenreports.com/public_content/politics/general_politics/april_2010/58_lack_confidence_social_security_will_pay_all_their_benefits

[3] 2010 Budget Chart Book: http://www.heritage.org/budgetchartbook

[4] Heritage’s David John writes: http://www.heritage.org/Research/Reports/2009/12/Social-Securitys-Deficits-Reinforce-the-Need-to-Reform-Spending

[5] as David John puts it: http://www.heritage.org/Research/Reports/2009/09/Social-Securitys-Unexpected-Deficits-Show-Urgent-Need-for-Reform

Copyright © 2011 The Heritage Foundation. All rights reserved.