“Doctor, Doctor. This patient has been sick a long time and I don’t think he’s getting any better.”
“Let me see that chart. Hmmm. You’re right, nurse. He’s declining at a faster rate than we expected.”
That’s the conclusion of the latest Penn Wharton Budget Model, a non-partisan research initiative that provides economic analysis of the fiscal impact of public policies. PWBM projects that Social Security’s financial condition is substantially worse than official Social Security Trustees estimate. The trustees don’t factor in how the nation’s growing debt erodes the size of the future tax base.
Since major Social Security reforms in 1983, Social Security Trustees have slowly reduced their projection of when the trust fund will be out of money. The original date was 2058. Today it’s 2034. PWBM estimates that, not only will Social Security coffers be dry and dusty in 2032, that same year there will be a cash-flow shortfall 36% larger than the Trustees estimate. By 2048, PWBM shows the cash-flow shortfall will be 77% more.
PWBM warns, “If Social Security shortfalls continue to contribute to the federal government’s unified deficits, consistent with no changes in taxes or benefits, we project that the federal debt-to-GDP ratio will exceed 200 percent by 2048, a path that is not sustainable.”
And with more Americans depending on Social Security as the largest part of their retirement income, the rapidly declining health of an ailing Social Security system has many worried about the patient.