Social Security cannot afford to pay all of the benefits it has promised. Beginning in 2017, it will run cash deficits that get bigger every year.
Many opponents of personal accounts often wonder what the reformers’ big hurry is. After all, the Baby Boomers won’t retire until 2009, Social Security won’t run out of cash until 2017, and the system will theoretically be able to pay full benefits until 2041. What they ignore from this analysis is the ever-declining amount of flexibility available to finance a transition to a fully-funded Social Security system. In 1964, nearly two out of three dollars of federal spending went to discretionary spending like the military and homeland security. By 1984, it was down to 45%. Today, it is 39% and falling. Soon, Social Security and the big entitlements will overwhelm defense, national parks, and other discretionary spending. With the diminishment of annual, flexible spending decisions, the ability to finance the transition to PRAs will be lost.
Social Security has a problem, and we need to fix it. Personal accounts are the solution.
Big Entitlements Like Social Security Are Eating Up Federal Spending
Source: Congressional Budget Office