The U.S. Treasury recently published an interesting set of charts – 13 in all – about the state of the U.S. economy. The economic data underlying these charts – and the state of the 2012 economy – will likely determine who wins the White House in November, but let’s set aside short-term political implications for this post.
Instead, let’s focus on just one of the charts, titled “Drivers of Long-Term Deficits.” This chart projects the costs for Social Security, Medicare & Medicaid, and U.S. Discretionary spending (spending that is not considered “mandatory”), as a percentage of gross domestic product (GDP).
This graph is a reality check for those who have made rather dire predictions about the long-term financing of Social Security: Social Security costs will rise by less than 1% of GDP from now until 2037, when they will level off and begin to decline.
This slight increase in costs due to the retirement of the Baby Boomer generation was not unexpected – it was anticipated in 1983, when Social Security reform efforts established the Social Security Trust Fund to begin saving up for the expected increase. The Trust Fund is now checking in at around $2.7 trillion – every penny of it reserved for the retirement of baby Boomers – and more than enough to pay every Social Security benefit for the next 25 years.
Social Security is critical to the economic security of millions of retirees, disabled workers, and families of deceased workers – and far too important a program to dismantle based on political rhetoric. In fact, with one simple tweak to Social Security, we could strengthen benefits and ensure Social Security will be around for many more generations of Americans.