On August 12, 2016, David Stockman writes on Contra Corner:
Social Security—–Trust Fund Confetti And The Coming Insolvency
……Here follows a deconstruction of Rosy Scenario. It underscores why the nation’s entitlement based consumption spending will hit the shoals in the decade ahead.
In their most recent report, the so-called “trustees” of the social security system said that the trust fund’s near-term outlook had improved. So the stenographers of the financial press dutifully reported that the day of reckoning when the trust funds run dry has been put off another year—-until 2034.
The message was essentially take a breath and kick the can. That’s five Presidential elections away!
Except that is not what the report really says. On a cash basis, the OASDI (retirement and disability) funds spent $859 billion during 2014 but took in only $786 billion in tax revenues, thereby generating $73 billion in red ink.
By the trustees’ own reckoning, in fact, the OASDI funds will spew acumulative cash deficit of $1.6 trillion during the 12-years covering 2015-2026.
So measured by the only thing that matters—-hard cash income and outgo—-the social security system has already gone bust. What’s more, even under the White House’s rosy scenario budget forecasts, general fund outlays will exceed general revenues (excluding payroll taxes) by $8 trillion over the next twelve years.
Needless to say, this means there will be no general fund surplus to pay the OASDI shortfall.
