Social Security

Obama's FY 2014 Budget on Social Security

Posted By: Dan Barrett - April 9, 2013

With budget fever gripping the Beltway policy world and state government inner circles, there are plenty of questions and skepticism on what President Obama's FY 2014 Budget will plan for the country's biggest expenses: government-subsidized health care and retirement entitlement programs. Though the budget is due to be released on tomorrow, some details have already come out on what taxpayers can expect and what this all means for the nation's bottom line. In an analysis by the Fiscal Times, many experts predict few surprises and many repeat proposals from the Obama 2013 Budget. I examine Social Security in the first of three posts. Note: Figures are in ten-year windows (not the usual five-year increments under the BillTally project).

Where it's at: According to the Social Security Administration, the regular retiree program has run a deficit (i.e. its expenditures are higher than the Trust Fund's non-interest receipts from withholding taxes) for the past two years and will continue upwards at an annual average of $66 billion between 2012 and 2018. The budgetary outlook could worsen. Deficits will likely increase sharply as the Baby Boomer generation enters retirement and the pool of workers expected to shrink, relative to reitrees. Jagadeesh Gokhale of the Cato Institute says that the disability portion of Social Security is the real worry because more people have been applying, which has mounted budgetary pressure, so much so that the program may default on benefits by as early as 2016.

What the budget might do:

Institute Chained CPI ($130 billion): By changing how cost-of-living adjustments is calculated for retirees, future payments would likely not be as high as projected as compared to traditional determinations. The change could also push taxpayers into higher tax brackets earlier than expected (a revenue boom for the program but a bust for workers). The concept does have some opponents including the AARP, many Congressional Democrats, and experts who support other options.
The FY 2013 Budget also listed a few smaller efforts that could result in a net $3 billion savings, though most of that is improving collections of information on state and local pensions, which may end up costing more than it saves.

For better or worse? Much of the focus is not on Social Security but on the other two big programs. This is likely a timely issue where Social Security is seen as at least momentarily solvent and will stay that way long after Medicare is expected to default. Chained CPI and the already proposed measures may temporarily help guarantee retirees benefits for a longer period of time but the program will eventually need serious reform and, like all of these programs, the sooner sustainable reforms occur, the less it will cost taxpayers. However, none of this addresses the disability portion of Social Security, which would need a bailout in a very short amount of time.

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Payroll Tax Hike Highlights Hypocrisy of Refusal to Reform Entitlements

Posted By: Manzanita McMahon - January 9, 2013

The Fiscal Cliff package ushered through Congress last week has left just about every taxpayer with a holiday hangover, thanks in large part to the temporary Social Security payroll tax cut that was not extended. Aside from any worthy debate over the wisdom of the two year relief on payroll tax rates, what the demise of this policy highlights is the absurdity of those in Washington who refuse to reform the entitlements that these taxes fund.

The end of the holiday, and shock of the payroll tax hike, makes clear the pain workers feel when they lose money from their paychecks. Particularly in the midst of a recession, even $50 a week can be sorely missed when it comes to utility bills, groceries, or supporting an out-of-work spouse.

Yet, it is the complete lack of entitlement reform, or even a discussion of Social Security retirement age adjustment or means testing for Medicare, that makes the sacrifice workers are now making an even more bitter pill to swallow.

Absent reform, the new revenues are essentially futile – dumped into programs that are bound to collapse under their own weight, and unlikely to do much good for those sacrificing their hard-earned money right now.

In fiscal year 2012 alone, Social Security spending totaled an incredible $773 billion, almost 5 percent of the nation’s GDP.

Using Congressional Budget Office (CBO) numbers, the Heritage Foundation explains just how dire the issue is:

“In 2011, Social Security incurred a $45 billion deficit. According to the 2012 trustees report, the expected average annual gap between Social Security spending and the program’s payroll tax revenue is $66 billion between 2012 and 2018.”

When revenues taken in cannot possibly cover the growing expenditures of the program, Americans who have worked and paid into the system could be left out in the cold. The CBO warned in October:

“By 2030, Social Security outlays will be about 6 percent of gross domestic product and will exceed dedicated tax revenues by about 20 percent. As a result, under current law, resources available to the Social Security program will become insufficient to pay full benefits in about 20 years.”

Reforming Social Security is something that makes lawmakers tremble, but it is absolutely vital. Fortunately, creative ideas for reducing costs and expanding choice for prospective retirees are being offered by some leaders in Congress. In the House, Paul Ryan’s proposal would enact the following reforms:

Preserves the existing Social Security program for those 55 or older.
Offers workers under 55 the option of investing over one third of their current Social Security taxes into personal retirement accounts, similar to the Thrift Savings Plan available to Federal employees. Includes a property right so they can pass on these assets to their heirs, and a guarantee that individuals will not lose a dollar they contribute to their accounts, even after inflation.
Makes the program permanently solvent – according to the Congressional Budget Office [CBO] – by combining a more realistic measure of growth in Social Security’s initial benefits, with an eventual modernization of the retirement age.

In the Senate, Sens. Rand Paul (KY), Mike Lee (Utah), and Lindsay Graham (SC) have brought forth the Social Security Solvency and Sustainability Act, which they assert could create a solvent social security system by lowering benefits for those with higher incomes, and gradually increasing the retirement age, among other initiatives.

What simply cannot continue, is forcing taxpayers to throw their earnings away into programs politicians refuse to properly manage, when they could do better saving and investing on their own.

In the 133th Congress, it will be imperative that lawmakers put in the time to fix Social Security so working men and women have a fighting chance to get back the money which gets taken out of their paychecks every week.

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The Late Edition: October 22, 2012

Posted By: Manzanita McMahon - October 22, 2012

Today’s Taxpayer News!

NTU recently joined a coalition of taxpayer rights groups in opposition to H.R. 6477, sponsored by Albio Sires (D-NJ), which would force taxpayers in all fifty states to subsidize billions of dollars worth of disaster insurance for those who live in disaster-prone regions.

Lately the talk over extending the Bush Tax Cuts has overshadowed yet another important tax quandry: the temporary reduction in mandatory Social Security contributions is scheduled to expire at the end of the year, costing workers an additional $1,000 a year according to this article form the Columbia Tribune.

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NTUF Release GOP Presidential Candidates Studies

Posted By: Jeff Dircksen - April 26, 2012

Study of GOP Candidates’ Platforms Finds Romney Proposes Double Gingrich’s Budgetary Savings; Paul’s Blueprint for Cuts Dwarfs Others’ Plans

(Alexandria, VA) – Mitt Romney’s spending cut agenda is twice as large as Newt Gingrich’s, while Ron Paul proposes double the reductions of his nearest challenger. Those are just some of the key findings of the National Taxpayers Union Foundation’s (NTUF’s) in-depth, line-by-line analysis of the 2012 GOP contenders’ federal budget proposals. NTUF has conducted studies of Presidential and Senatorial candidates’ fiscal policy platforms for more than a decade.

NTUF analyzed all of the candidates’ key proposals outlined on their websites, in their official campaign documents, and touted in speeches. By referencing these plans with equivalent bills in Congress, items in the federal budget, and a variety of other cost sources, NTUF builds a comprehensive picture of the bottom line impact of the candidates’ budget-focused proposals. Some cost estimates are based on NTUF’s BillTally system, which since 1991 has served as a resource on thousands of pieces of legislation introduced each year that could affect federal expenditures.

All told, NTUF identified 151 proposals among the four Republican Presidential office seekers with a potential impact on annual federal outlays. Ninety-four of those impacts could not be accurately determined, generally because the candidates failed to provide sufficient detail to pinpoint a cost.

2012 Republican Presidential Candidate Spending Analysis
Type of Proposal	Newt Gingrich	Ron Paul	Mitt Romney	Rick Santorum
Spending Increase	6	2	3	6
Spending Cut	6	6	11	16
Unknown Cost	27	13	28	27
TOTAL	39	21	42	49
Source: National Taxpayers Union Foundation

According to NTUF, GOP frontrunner Mitt Romney’s platform would reduce federal outlays by a net of $353.0 billion annually, Newt Gingrich’s extensive policy plans would shed $146.2 billion from the budget, and Rick Santorum had $670.6 billion in cuts on his radar prior to ending his campaign. Ron Paul seeks $1.2 trillion in yearly net reductions.

2012 Republican Presidential Candidate Spending Analysis (Dollar Amounts are in Billions)
Spending Category	Newt Gingrich	Ron Paul	Mitt Romney	Rick Santorum
Economy, Transportation & Infrastructure	-$4.565	-$4.565	-$4.3	-$4.565
Education, Science & Research	-$60.056	N/A	N/A	$0.144
Energy, Agriculture & Environment	-$40.561	-$5.953	Unknown	-$2.465
Federal Government Reform	Unknown	-$1,173.0	-$383.409	-$647.158
Health Care	-$41.155	-$40.235	-$136.098	-$42.655
Homeland Security & Law Enforcement	$0.120	Unknown	Unknown	$1.148
National Security & International Relations	$0.052	Unknown	$170.802	$30.591
Veterans	Unknown	$2.704	N/A	N/A
Miscellaneous	N/A	N/A	N/A	-$5.637
TOTAL	-$146.165	-$1,221.0	-$353.005	-$670.597
Note: Totals may not add due to rounding. Source: National Taxpayers Union Foundation

Key findings include:

Romney's plans to reform the federal government -- including proposals to limit federal spending to 20 percent of GDP and to reduce the number of government workers over time -- would save taxpayers an estimated $383.4 billion per year. The area in which Romney would propose the largest budget increase is national security with a boost of $170.8 billion. (PDF version)

Ron Paul’s single largest savings item is his multi-pronged effort to balance the budget – at $1.078 trillion in reductions, it is a stark reminder of the size of the current federal budget deficit. (PDF version)

Newt Gingrich’s moon base plans would cost at least $4 billion per year. His vision for new rocket propulsion technology could not be quantified at this time. (PDF version)

Rick Santorum’s largest individual savings item was signing off on a version of a Balanced Budget Amendment to the Constitution, which would save $519.6 billion per year. A major assumption was that Santorum would abide by the terms of the Amendment he backed, which calls for limiting total federal expenditures to 18 percent of Gross Domestic Product. (PDF version)

“The field of candidates has often changed over the past year, but their ideas for federal spending and savings will continue to be debated as the campaign season evolves,” concluded NTUF’s Director of Congressional Analysis Jeff Dircksen. “Through it all, NTUF will be monitoring the candidates’ proposals – including those of President Obama – to inform the vital national conversation about the future direction of Washington’s fiscal policy.”

Note: The detailed NTUF analyses of Mitt Romney’s, Newt Gingrich’s, Ron Paul’s and Rick Santorum’s federal budget policy platforms are available online at www.ntu.org.

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Social Security Still Going Broke (Again)

Posted By: Jeff Dircksen - April 23, 2012

Last year, Social Security was going broke. This year, Social Security is still going broke -- again. The Wall Street Journal highlights items from the Trustees' report that documents the system's continued slide into bankruptcy:

Here is some key data released by the trustees:

1) The Social Security Disability Insurance trust fund will exhaust its reserves in 2016, two years earlier than projected one year ago.
2) The Social Security trust fund that goes mainly to retirees will be exhausted in 2036, two years earlier than projected last year.
3) If the funds are combined, they would be exhausted in 2033, three years earlier than projected last year.
4) In 2011, 44.8 million received benefits from Social Security’s trust fund for retirees, compared with 43.8 million in 2010.
5) In 2011, 48.7 million people were covered by Medicare, up from 47.5 million in 2010. That means the program is covering on net an additional 100,000 Americans every month.
6) The trustees said the worsening picture for the Social Security trust funds was due to “updated economic data and assumptions.”
7) The ratio of workers paying taxes per Social Security beneficiary continued to fall. It will hit 2.8 workers per beneficiary in 2012, down from 3.4 in 2000.

For reference the Journal provides a look back at previous estimates:

The historical data from reports over the past five years is below.

Key:
DI=Social Security Disability Insurance
OASI=Social Security Old-Age and Survivors Insurance (the bigger account mostly used by retirees)
Combined=an estimate of what would happen if DI and OASI were combined into one fund

2011 trustees reports
DI exhausted 2018
OASI exhausted 2038
Combined exhausted 2036
Medicare HI trust fund 2024

2010 trustees reports
DI exhausted in 2018
OASI exhausted in 2040
Combined OASDI 2037
Medicare HI trust fund 2029

2009 trustees reports
DI exhausted 2020
OASI exhausted 2039
Combined OASDI 2037
Medicare HI trust fund 2017

2008 trustees reports
DI exhausted 2025
OASI exhausted 2042
Combined OASDI exhausted 2041
Medicare HI trust fund 2019

2007 trustees reports
DI exhausted 2026
OASI exhausted 2042
Combined OASDI exhausted 2041
Medicare HI trust fund 2019

Of course, we could just pay the System more interest on all of its IOUs.

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Cartoon Friday

Posted By: Jeff Dircksen - September 23, 2011

(David Hitch)
HT: Tim Wise

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Social Security STILL Going Broke

Posted By: Jeff Dircksen - May 13, 2011

Last year, Social Security was going broke. Hopefully, you're sitting down for this because it turns out that Social Security is still going broke -- only a little faster than expected, according to the new Trustees's report:

Trustees for the two funds said the Medicare trust fund is projected to exhaust its funds in 2024, not 2029 as estimated last year, and that the Social Security retirement program will run out of money in 2036, not 2037 as previously thought.

Any bets on whether there will be an alternative report from Medicare's Chief Actuary this year?

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Cartoon Friday

Posted By: Jeff Dircksen - April 15, 2011

Nate Beeler

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More Social Security Payouts & Maple Syrup Bill Covered in Latest Taxpayer’s Tab

Posted By: Dan Barrett - April 13, 2011

Tab Insert

As the federal government narrowly escaped a shutdown and the President delivers a speech on his long-term fiscal plans, NTU Foundation has been scoring the bills introduced by your elected officials. Some bills would greatly increase the spending of tax dollars while others would scale back spending and reduce the budget. It is our intention to present both kinds of bills to inform taxpayers.

The most expensive bill scored in the past week would increase payments to Americans who turned 65 between 1979 and 1988. Because of earlier reforms to the Social Security entitlement program, this age group, called “Notch Babies,” apparently received up to 55 percent less in payments than those entering the system, before and after. The measure would allow seniors either to accept a lump payment of $5,000 over four years or to accept a modified benefit payment plan over ten years. Check out the history and the costs of the Notch Fairness Act in Issue 12 of the Taxpayer’s Tab.

Bills covered in the latest Taxpayer’s Tab includes:

HR 1001/S 118, Notch Fairness Act of 2011
HR 620/S 391, Recovering Excessive Stimulus Expenditures for Taxpayers (RESET) Act
HR 572, Clean Ports Act of 2011
HR 1275/S 691, Maple Tapping Access Program Act

Join NTUF on Twitter! We broadcast our latest work and highlight the spending agendas of the legislators representing you in Washington DC. Not a Twitterer? Sign up for the Tab so you get the most out of our research. Like what you see? Support NTUF and ride the wave of transparency.

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Cartoon Friday

Posted By: Jeff Dircksen - April 8, 2011

Nate Beeler