How best to keep social security solvent

Abstract

For several years the press has carried stories about impending financial problems of the Social Security program, or at least the cash-benefits portion thereof (Old-Age, Survivors, and Disability Insurance). Although at times there has been exaggeration of the problem, causing some people to doubt whether their Social Security checks would be forthcoming, the problems are very real and very significant. Solutions are needed, and they cannot be delayed too long. Perhaps the clearest evidence of the financing problems is the fact that the Disability Insurance Trust Fund will be exhausted in 1979. Also, the Old-Age and Survivors Insurance Trust Fund will be depleted a few years after. If such conditions are allowed to occur, then benefit payments will stop. Obviously, legislative changes must be made soon, certainly no later than 1977, in order to become effective in 1978 and head off such developments. Those now receiving Social Security benefits need have no fear about their checks coming in the next two years. In mid-1976, the balance in the two trust funds was about $45 billion, but it is almost certain to decrease steadily in the future, unless changes in the law are made. Not quite as evident, but perhaps equally important, is the long-range financing difficulties of the Social Security program. The estimated average cost of the program measured over the next seventy-five years is about 75% higher than the average value of the tax income. Admittedly, the major portion of this deficiency will come after the turn of the century, but the time to remedy the situation is now, before matters get progressively worse.