“SOONER” IS COMING SOONER THAN YOU THINK …
In that report we cited the latest estimates from Social Security trustees – who predict the DI fund will go into the red late next year. Meanwhile Social Security’s bigger retirement fund is currently projected to run out of money in 2035 (or 2034 if it bailed out the DI fund).
It turns out those numbers are wildly optimistic.
From a post by Contra Corner’s David Stockman …
On a cash basis, the OASDI (retirement and disability) funds spent $859 billion during 2014 but took in only $786 billion in taxes, thereby generating $73 billion in red ink. And by the trustees’ own reckoning, the OASDI funds will spew a cumulative cash deficit of $1.6 trillion during the 12-years covering 2015-2026.
Naturally, Washington, D.C. won’t be budgeting money to cover that gap – meaning Social Security will be adding $1.6 trillion in new debt over that period.
According to Stockman, Social Security trustees achieved their optimistic timetables by “redeeming phony assets; booking phony interest income on those non-existent assets; and projecting implausible GDP growth and phantom payroll tax revenues.”
The “trustees” achieved their 2034/35 date by projecting annual economic growth of 5.1 percent over the next twelve years.
As we’ve repeatedly noted, the best the economy has been able to muster since 2000 is 3.8 percent growth – in 2004. It last hit the three percent threshold in 2005 – at 3.5 percent.
The last time the economy grew at a five percent clip? 1984.
Oh, and this year’s growth has been abysmal, too.
With all the global economic headwinds out there – what makes these accountants think five percent annual growth is even remotely possible?
Stockman also refers to the $2.79 trillion in current Social Security assets as “government accounting confetti.”
This figure allegedly represents the accumulated excess of trust fund income over outgo historically, but every dime of that was spent long ago on aircraft carriers, cotton subsidies, green energy boondoggles, prison facilities for pot smokers, education grants, NSA’s cellphone monitors, space launches and the rest of Washington’s general government spending machine
Add (well subtract) it all up and Stockman estimates Social Security’s D-Day will come not in 2034 or 2035, but more likely in 2026.
So yeah … let that sink in. And while it’s sinking in, don’t ever forget who is on the hook for it.