Social Security did not take in as much money as it spent last year, according to the latest report by the Congressional Budget Office (CBO).
The CBO estimates that over the next ten years, Social Security expenditures will continue to exceed the dedicated revenues by about10 percent as the Baby Boomers retire.
“That gap will grow larger in the 2020s, and by 2030, Social Security outlays will be about 6 percent of gross domestic product and will exceed dedicated tax revenues by about 20 percent,” the CBO writes.
For fiscal year 2012, Social Security spending totaled $773 billion, nearly 5 percent of GDP.
The projected year of Social Security insolvency continues to be moved up, with the latest projections being 2033.
“Many Democrats on Capitol Hill argue that Social Security isn’t in dire shape, in part because the program holds assets in special-issue U.S. Treasury securities. Still, the CBO report offers a warning for the future, noting that an aging population will put more pressure on Social Security,” the Wall Street Journal reports.
The payroll tax that pays for the entitlement program was suspended in 2010 to encourage middle-class consumer spending. It will likely be reinstated after the end of the year.
“As a result, under current law, resources available to the Social Security program will become insufficient to pay full benefits in about 20 years,” CBO projects.
“The original point of the payroll tax holiday was to stimulate consumer spending and aid middle-income households. But now Congress needs the money as it struggles with vast deficits and believes the economy can withstand the expiration,” the New York Times reports.
President Barack Obama and Republican challenge Mitt Romney have both skirted discussing details about social security reform on the campaign trail.
“Details on the candidates’ Social Security plans have fallen by the wayside as both the Obama and Romney campaigns have focused on the economy, jobs, Medicare and, as of late, foreign policy,” Business Insider reports.
Senior Obama advisor David Axelrod admitted earlier on MSNBC’s Morning Joe that Obama has no plan for Social Security reform, he just insisted the approach has to be a balanced one.
“Right now Social Security cuts off at a lower point. Can you raise the cap so the upper income is paying a little more into the program? Do you adjust the growth of the program? That’s a discussion work having. But again, we have to approach it in a balanced way. We’re not going to cut our way to prosperity,” Axelrod said.
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