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  • Chart of the Week: How Social Security Is Contributing to the Spending Crisis

    Last week’s presidential debate at the Reagan Library elevated Social Security as a national issue that could reshape the 2012 campaign. Candidates spent the week trading blows about the role of the 76-year-old social insurance program.

    Leaving aside the political rhetoric, one thing is certain: Social Security needs to be reformed or America will face a dismal future. As one of the three major entitlement programs — along with Medicare and Medicaid — Social Security is contributing to a very dire long-term budget outlook. Spending on the three entitlement programs could consume one-half of the economy by 2056.

    Heritage released a plan earlier this year to cut spending and save the program. “Saving the American Dream” outlines steps lawmakers could take now, such as raising the retirement age and creating a flat benefit for Millenials, which would return the program to its original purpose of providing true insurance to those who need it most.

    Update: The chart above has been updated to reflect the newest numbers available

    Posted in Featured, Scribe [slideshow_deploy]

    46 Responses to Chart of the Week: How Social Security Is Contributing to the Spending Crisis

    1. West Texan says:

      As I was watching the Fox news 9/11 Sunday memorial, there was an irony to their split screen coverage. While New York and Pennsylvania licked their wounds that horrific day, the Pentagon whose mission is to provide for the nation’s defense was doing the same. Unfortunately, the federal government for far too long has been distracted by domestic affairs. The answer to entitlement spending is to eventually turn domestic matters back to the individual states where these concerns constitutionally belong.

    2. joe says:

      a pyamtd scheme made for accountants and finane wizards

    3. G8r.Ray says:

      Unless I'm really mistaken (I think I'm not!), Medicare is the entitlement that is accelerating greatly; Medicaid is accelerating slightly; but, Social Security appears to be holding without accelerating. That can be much more clearly observed, if Social Security were at the bottom of the chart with the other two entitlements stacked above Social Security.

      In my opinion, Medicare appears to be the 800-lb gorilla that must be reformed with first! Of course, it may be that Social Security is much easier to reform…just tell the seniors, "Sorry, no more monthly checks" and those still paying FICA, "Ah, just keep those payments coming in!"

      • DaveH says:

        Very astute observation. I had not picked up on that until reading your comment. Clearly medicare is the biggest problem of the three, but the other two, although not growing as much, are problems even in today's proportions. Anyhow, thanks for pointing out how graphs can be misleading if we don't take the time to analyze them a bit.

      • florin says:

        What I honestly don't understand is why most politicians hit on Social Security which goes, for the most part, to elderly people who have worked hard for most of their lives while no one hits on our Welfare program which goes to thousands, maybe even tens of thousands, of people who are living good lives off their welfare checks and food stamps – people who are healthy and well able to work but who won't…someone needs to have the courage to address this issue!!!

      • Willyb33 says:

        Excellent observation Ray. The chart does not show the revenues from Social Security and Medicare taxes so that we can better see the impact of entitlements on the deficit. I think that revenue and spending reporting should be separate for Social Security and every other government activity that has a dedicated revenue stream (Medicare, highway trust fund, airline ticket surcharges, etc.). They are all lumped together now to hide the out of control spending of Congress. If the information was presented that way maybe the lazy news media could help us see how much of our taxes are diverted from what the law says they should be used for.

      • Lauri says:

        What? Social Security isn't growing??? Where'd you get that?

        First, yes, Medicare is the biggest consumer, growing at the greatest rate, and does need reform, but Social Security is a much larger and more important issue.

        Social Security costs depend on the number of recipients. What's going on right now? That's right — the largest generation in American history is starting to retire. For the next 18 years, Social Security is going increase incredibly, supported by the smallest generation in American history. We're entered upside down funding territory. If we had actually funded Social Security rather than relying on future generations to pay the bill, this wouldn't be an issue, but we didn't and now we're stuck. We can give those currently retired their promised benefits, but by 2026, if we haven't reformed Social Security within this decade, the entire system will go away whether we want it to or not.

        • Lauri says:

          Those of us who were born near the end of the Baby Boom need to realize that we will not be getting any benefits. Those born after the Baby Boom need to be told, you're supporting a generation of lazy-livers, sorry about that. For my kids, if we do that, it might mean they won't be in virtual economic slavery to their grandparents and parents. They know they can share my house if they take care of me. That's my retirement program. It should be yours too, because it what we as a country can afford. If we don't reform Social Security with an eye toward ending it within this decade, the country faces bankruptcy. It's just the way it is.

    4. Dan says:

      Not only social security, but wildfires too. Everyone who works for wildfires might initially come off as Republicans, but they are liberals at heart. They are all complicit in the misuse and abuse of government money. No one will report the deliberate lying of getting paid for 16 hours of work per day, when they only work maybe 9. They are killing this country, like terrorists.

    5. Redyns says:

      Just put back into SS that was taken out ! Fix it so our elected officials can not use or abuse the system! STOP scaring us old folks that we are going to lose our SS benefits; Just tell us the Truth for a change!

      • Lauri says:

        Nice idea, but the numbers don't add up. We haven't got the money. Besides, Social Security was NEVER fully funded. What people don't realize is that most people get $3 for every $1 they put into the system. It's always been that way, with future generations funding Social Security for the retirees of today — they just didn't bother to talk about it until the Reagan Administration. In "New Deal or Raw Deal" there's a quote from FDR to one of his top economic advisors who pointed out that Social Security was unsustainable from its first year. FDR said that future generations would have to figure out how to fund it because it was too important of a political tool for him to pass up.

    6. Jeff, Illinois says:

      What is with the present demonization of social security . . Hasn't this program helped millions for years and is solvent for many more years to come (certainly with some tweeks). . Why the emphasis on this now . . How about the excess in military spending and what about the 3.9 Billion given to the Oil Industry as a subsidy when they've made record profits. The GOP is consistently on the wrong side of the issues. If it's not demonizing FEMA it's the EPA or Medicare. The populace as a whole is for strenghthening these institutions. It's only those who want to hoard the wealth that they have who question these programs.

      • florin says:

        I believe it's more politically correct to go after Social Security and the elderly recipients who have worked for most of their lives than to go after those who cheat the Welfare system-tens of thousands of healthy men and women who are able to work but won't..why is this, I wonder?

        • Jeff, Illinois says:

          Florin . . your point is very confusing to understand . .

          • Bobbie says:

            the demonization is the handling of it, Jeff!
            Are you helping yourself to heal from your collective thoughts of influence that weakens your inner existence? doesn't seem like it! You're a part of it…

      • lal1934 says:

        Jeff; i suggest you do a little research on the health of the SS system, you will find that it is at present today North of $15.3 Trillion "Underfunded", it certainly does need some tweeks as you put it. SS was implemented when the average recipient lived to about 66yr old. Now 80 and 90 is very common so the Ponzie Scheme needs major reform. But you are correct it has helped people to quit saving for the future because the Government will take care of me.

    7. So, Social Security is in fine shape– it will develop a shortfall of around 1.5% of GDP in 20 years. We can debate just how, but it's simple enough to fix.

      It's misleading to claim that "Medicare" is driving the long-term deficit problem. In fact, Medicare does a better job at cost containment than do private insurers. The problem is health care costs.

      As everyone is aware, the problem is that we pay way, way more than the rest of the world for health care, for not-any-better results. From one recent study:

      In 2007, the total spending for health care accounted for 16% of the country’s GDP, the highest share among the OECD and almost double the OECD average
      On a per capita basis also the U.S. spent the highest with a total of $7,290 which is two-and-half times the OECD average
      The public share of health care expenditure in the USA (45%) is less than any other OECD country
      Despite spending the most, the U.S. provides health care coverage for only the elderly, disabled and some of the poor people
      In comparison, the same amount is enough to provide universal health care insurance by the government for all citizens in other OECD countries
      35% of total health care expenditures is done by private health insurance which is the highest In OCED

      So, what we need is to continue with health care reform, of the sort we started with the Affordable Care Act.

      • Lauri says:

        Yes, that's why people in England wait weeks to see a doctor and years to see a specialist and often die before they do. That's why women above a certain age there are denied breast cancer treatment that is readily available and 90% effective here in the US. That's why stroke patients are housed in long-care nursing facilities with shoddy care and virtually no rehabilitation rather than the system we have here that gets people back on their feet.

        Universal health care DOES NOT WORK! It hasn't worked anywhere for any length of time. When government gets involved, the costs either go up astronomically (Massachusetts) or care must be rationed (England, France, Sweden).

      • Edith70 says:

        Absolutlly! We need to get our costs controlled. Why are drug companies charging is dipicable. And, they are still making a profit there too! We are being taken by all the medical suply companies, drug companies and even a lot of providers just because our system allows them to do so. We need real reform in our whole health care system. Telling people to go out and buy their insurance on their own is NOT the answer. It does not control the costs the companies charge nor the exhorbitant profits they a re making. Why does our country allow such profits to be made based on people’s misfortune? It is crazy!

    8. florin says:

      I worked in 'the system' for years and noted that there are many, many welfare recipients who are able to work but who won't because they live well off the system – welfare checks and food stamps. Bill Clinton tried to address the program with work for welfare. Those who are truly unable to work should receive welfare but those who are able to work, should get off the welfare list. Surely someone will have the courage to address this issue instead of going after the elderly who have 'paid their dues.'?

      • Lauri says:

        I agree with you, except that Bill Clinton did not address the problem. The conservative Republican Congress came up with welfare to work and it worked. Bill Clinton was a political opportunist who recognized that if he didn't get on board with what Congress was trying to do, he wouldn't win reelection, so he put out a lot of press taking credit for their ideas, but in reality, if he'd had his way, we'd have HillaryCare now instead of ObamaCare and there never would have been "welfare to work."

    9. WHICH WAY says:

      AS USUAL THE CRY IS "WE'RE RUNNING OUT OF MONEY"BUT NO INFORMATION ON WHERE THE MONEY WENT.A BUSINESS MAN ALWAYS ASKS FOR A BREAKDOWN AND LOOKS FOR WAYS TO BE MORE EFFICIENT,CUT UNNECESSARY COSTS,PUT SERVICES OUT TO BID,CHECK HONESTY,ETC.

      • Lauri says:

        There was NEVER enough money in the SS accounts. It relied (from the very beginning) on people dying an average of three years before retirement age and enough workers to support the few who didn't die that early. Then what little was in there was raided by Clinton to make it look like he'd created a surplus.

    10. Bill says:

      I am not sure that this is a complete answer to aid in the restructure of entitlement spending but what about eliminating the base cap of $106,800.00 in earnings on Social Security contributions. I know that the cap is tied to the "average wage index" but I think either the elimination of or at least pushing the contribution levels up, and I mean way up to cover 100% of earnings up to at least the $500K level is a better idea than having the fund default.

      Yes, this course of action would impact me as I have been fortunate enough in my career to be able to exceed the SS contribution cap for the past several years, but I would still endorse such a plan. I can also see that depending on the contribution level actually set that some tax payers could very likely contibute more to SS than they would be eligilble to receive as payments once they started drawing dollars. Of course for folks like Warren Buffet that wouldn't be an impediment – based on his statements earlier this month, he is perfectly willing to have the super rich contribute their fair share.

    11. Ed Bernard says:

      According to some reports some 46% pay no income tax.Why? Are they not U.S. citizens?I see no reason (other than politics) for this to be so.The only explanation may be that this 46% have no income.At the risk of offending some Republicans (and I am one) taxes simply must be raised up to previous levels in order to provide these necessary services to our citizens.

      • J Wells says:

        You have a good point, Ed. I believe Social Security should never have been used to support those who are physically unable to work. The States should handle that. And I do not condone our government spending probably $20 Trillion dollars of Social Security (supposedly to be held in TRUST) that was dumped into the General Fund! Our politicians have really done us wrong. Social Security is NOT the problem. The more grown up I become, the less I have to work with. I confess, I am on Social Security, but I would not be even eating decently if I did not have a tiny side retirement income . No raises in three years, but my representatives have had them? It costs more to go to the doctor, to use gasoline to get food, and the food itself. How can these people justify saying we should pay a big hunk of taxes on the money we gave the to Social Security (fica) in the first place? People that have lots of money shouldn't get a lot of social security. And in fact, wealthy people ( or people comfortable) seldom understand all the corners SS recipients need to cut, or things we do without, or the fact we seldom get to spend on ourselves? Our representatives need to walk in our shoes for a year, and see what it's like. How come our Medical coverage can't be as rich as our representatives in government? Lots of things would be fixed, if they were held to the same pathetic rules. I am so fed up with our questionable leadership I do not listen to Presidential speeches, and have stopped watching the news. Get to the real guts of the issue of Social Security and other multiple failures like the flood of spending and vote against all incumbents.

      • West Texan says:

        Go ahead and raise social taxes all you want in your state, unless of course you're from Texas. Then I'd say no way. We already pay a fair share in property and sales taxes. Social entitlements are not federal business. Never have been. But that didn't stop them from trespassing on states' domestic affairs.

    12. Bill Witter says:

      I am really tired of hearing Social Security and Medicare called "Entitlements". These are programs bought and paid for by me and my employers over, in my case, 48 years. In fact, I still pay $96.50 per month for medicare. It is not my fault that my elected officials have, for years, raided the funds and spent the money on, among other things, pay raises for Congress. President Bush tried to fix it but was blocked by Congress.
      If all of the money that has been stolen were to be returned, or from this day forward, placed in a secure fund like our 401(k) funds are, the problem would heal itself.

      • Bobbie says:

        the people who pay in ARE the ENTITLED! Government acts out of control and is not discipline to their own rules but makes sure those who are "entitled" qualify by the book while government freely goes behind those entitled to give it to others who aren't qualified the same. There is no equal application and some qualify depending on their NATIONALITY OF IMMIGRANT STATUS!!! Nothing to do with inability!!!!!!! government is enslaving American tax payers while government members bribe for votes!! and in the control of government and their authority, lots that shouldn't be, is hidden from the tax payer when government control isn't held accountable.

      • Lauri says:

        On average, a person who pays into Social Security for their entire adult life, will draw about 3x what they and their employer contributed into the system. You can do the math easily enough. I did. I just looked at the FICA in my check, doubled it for my employer's contribution, factored my weeks of working in my adult life and came up with an approximate figure. I then assumed I retire at 67 and that I live as long as the average person in my family, to age 92. I took the Social Security figure for this year and factored that out. Sure enough, about 3x what I've contributed. My sister-in-law is a tax accountant and she's done this with 100s of people — some just for her own education, some becuase they asked her to. It always works out to be 3x what you contributed.

        Entitlement program!!!!

      • lal1934 says:

        Bill; Your a learned man that knows what is really going on in our great Country.

    13. maggie says:

      If Social Security is an "entitlement", why did my husband and I work all those long hard hours and years. To now be told I'm living off an entitlement.
      Medicare and Rx medicare- thank God I have them. I did not like it when they passed the Rx one, because it was unfunded.
      Thats why we are trying to replace the same old get-a-longs, with real thinkers, planers, and producers.
      Do not clump we elder citizens as "entitlement takers". Were still producing in many ways.

      • Robert A Hirschmann says:

        Entitlements my ass, I paid cash for my Social Security Insurance! Just because they borrowed my money, doesn't make my benefits some kind of charity or handout! Congressional benefits like free health care, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days: now that's welfare; and they have the nerve to call my retirement entitlements!

        Someone please tell me what the Hell is wrong with all the people that run this country!
        We're broke and can't help our Seniors, Veterans, Orphans, Homeless etc.?

        Our retired seniors living on a fixed incomes receive no aid nor do they get any breaks while our government gives Hundreds of Billions to Foreign Countries!

        They call Social Security and Medicare entitlements even though most of us have been paying for them all our working lives. And now, when its time for us to collect, the Government is running out of money. Why did the Government borrow from our Social Security in the first place?

        We have many adoptable children who are shoved aside to make room for the adoption of foreign orphans.

        AMERICA: a country where we have homeless without shelter, children going to bed hungry, elderly going without needed medication, mentally ill going without treatment, etc.

        Imagine if our Government gave us the same support they give the people who hate us.

        Sad, isn't it?

    14. CalWoman says:

      Looking at the chart it appears that the real crisis is Medicare-not Social Security or even Medicaid. Why not toncentrate on Medicare first then attack Social Security. Better yet attack all of them and label it "Entitlement Crisis".

    15. LegalCitizen says:

      SS was earned & paid in by the Seniors. the government OWES them that but the govt spend it all over the years and now they want to cut them off. ………NOT !!!!!! Get the bailout money back from the banks etc.

      • Glen Lewis says:

        OK, who LET "govt spend it all over the years" in the first place?

        It was earned and paid into by seniors who let the people THEY elected raid the system systematically for decades. The warnings were made all through the seventies, eighties, nineties, and right up to today. And "The Seniors" went right along with the mismanagement of THEIR Social Security – MY Social Security, too, BTW – by electing the same people year after year and decade after decade.

        Now that it's their turn at the trough, they're finding that it's empty. Too bad.

        I'm 49 years old. I have paid into Social Security and Medicare since I was 17 years old. That's 32 years of having my paychecks raided in the name of those programs.

        I do not believe, even for a moment, that any of that money will ever come back to me.

        We will not "recover" any of that money. It's been spent. It is GONE.

        "Get the bailout money back from the banks etc. " Yeah, right. What, $500 billion or so? Against the trillions (a trillion is 1,000 billions) that has been stolen from those programs? A drop in the bucket.

        Also a Legal Citizen.

    16. Ron says:

      I paid into Social Security for years, I paid into Medicare for years and I still pay for Medicare and I am the the cause of the spending crisis? I am truly sorry now that I ever paid in a dime, but then, I did not have a choice.

    17. West Texan says:

      SS and Medicare are entitlements, not retirement savings. Think of a poker game where you're forced to play regardless of the cards dealt you. You have no choice but to add your coins to the pot. Once bets are in there's no backing out. Because you're part of the game, however, you're entitled to a small portion of whatever pot exist. Payouts these days have mainly been empty IOUs. The trusted dealer's seat changes with each elected congress and administration. Some are more honest than others. Recently, a few have been down right cheats. You decide who's who.

    18. G8r.Ray says:

      Do the posters to this article not understand that all those FICA payments we've made are not for our own Social Security checks, but are for those already retired while we've made those payments? Workers of today are paying to support those who are retired today PLUS the excessive spending of the professional politicians.

      Unfortunately, because the Fed is allowed to print currency w/o any collateral, our currency is getting less valuable. That produces two consequences (ultimately, both bad): (1) it pushes wages up (moving today's workers into higher tax brackets), which pushes up income tax revenues, and (2) Social Security recipients receive less valuable fixed income each year. <sigh> Maybe the thinking is that the professional politicians don't have to worry about those old Social Security recipients, since they'll be dead soon and can't vote; but, those welfare recipients…well, they'll still be around casting votes to continue their entitlements (and increase them, too). <double sigh>

    19. Glen Lewis says:

      You say, "Spending on the three entitlement programs could consume one-half of the economy by 2056."

      It won't. It can't.

      The systems for collection and disbursement will break long before that time.

      They are breaking down now and politicians are refusing to talk about it, let alone do anything about it, lest they lose the next election.

    20. Pete Houston says:

      As part of the responsibility line of thought for this issue. Who voted in the politicians over and over again that poorly ran the system for the last 40 years. The seniors are simply seeing the results of the elected officials that they put into office. So now that they see the results of their actions they want someone to walk behind them and clean up their mess. Sounds like the last generation is just like the current generation. I have always expected that I was the one responsible for myself and my family. The rest of the country needs to stop their whining and do the same. If they were too stupid to not take care of themselves, they can eat dog food like a good pet of the state. If you are stupid enough to give away your freedom then you don't deserve to be free. Those of us that are still free are not interested in paying for the stupid or lethargic or the ignorant. Charity has a place in our society but lets not mix charity with the people that don't take responsibility for their actions.

      Pete

    21. Stirling says:

      If the private sector is crushed by obamacare mandates in 2014 those numbers will accelerate to consume more at an earlier date. Welcome to Utopia… everyone has Entitlements but nobody has a job or money to support them financially.. Your Government at work.. creating dependency one citizen at a time..

    22. Loretta Bates says:

      Why is Social Security and Medicare seemingly the first things Congress focuses on in order to cut spending? Also, the military? We seniors and the present day workers have paid in to this fund over many years. How did Congress get their hands on OUR money and mishandled it?

      • lal1934 says:

        No one is talking about doing anything to these programs for folks like you and me. It's the younger age group less than 50 that would see the reforms. Loretta you will be safe from any changes.

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