Social Security “cannot run out of money, nor can benefits be threatened by a sudden shortage of revenues,” is a true and correct statement that continues to need restating. That’s why the Center for Economic and Policy Research (CEPR) released today, Social Security: Long May It Wave, by CEPR Senior Research Fellow Max B. Sawicky.
Social Security: Long May It Wave demystifies the inner workings of Social Security funding, explains why retiring boomers won’t drain the program dry, and puts the trust fund “exhaustion” date into perspective. That is a particularly relevant point after the recent release of the annual Social Security Trustees’ Report pinpoints 2034 as the year when the combined Old Age and Survivors Insurance and Disability Insurance trust fund’s accumulated surpluses are exhausted.
A point reiterated throughout the paper is the shortfall problem is political, not economic. “At no point is the fund ‘broke,’ since if over a hundred million workers are paying the payroll tax, the fund has revenue,” explains Sawicky. It is easy for the government to erase the program’s actuarial deficit, as well as the shortfall in 2034, with additional revenues.
Social Security has survived economic recessions before, and this pandemic-induced recession is no exception. Sawicky explains, “The pandemic worsens the outlook for Social Security, as indeed does any economic downturn, but in the current circumstances, only marginally.” He cites Social Security’s chief actuary, Stephen Goss’s assessment that “the pandemic-induced recession may be largely recovered by 2023 with little permanent effect,” and notes that the most recent GDP and employment data indicate that the decreases in 2020 have now been largely reversed.
The Center for Economic and Policy Research (CEPR) is an independent, nonpartisan think tank that was established to promote democratic debate on the most important economic and social issues that affect people’s lives.
CEPR was co-founded by economists Dean Baker and Mark Weisbrot in 1999. CEPR’s Advisory Board includes Nobel Laureate economists Robert Solow and Joseph Stiglitz; Janet Gornick, Professor at the CUNY Graduate Center and Director of the Luxembourg Income Study; and Richard Freeman, Professor of Economics at Harvard University.