Print

Email story

Comment

Email editor

New Social Security solvency numbers don't change debate

By Times Staff Writer
Published March 24, 2005

WASHINGTON - The numbers are new but the debate's the same.

Social Security is going broke and slightly sooner than it was a year ago, President Bush's three Cabinet officers and two private citizens who oversee the program as trustees said in their annual report Wednesday.

But that's not soon enough to treat the looming insolvency as a crisis, some Democrats said. They say Bush's plan to let people divert some of their Social Security taxes to personal retirement accounts would make the program insolvent at least a decade earlier than 2041.

That's the date, the trustees said, that the $1.6-trillion accumulated in trust accounts from excess payroll taxes over past decades - really just IOUs because the government already has spent the money on other things - will dwindle to zero from sending monthly benefits to retired baby boomers. After 2041, benefits would have to be cut by more than 25 percent if payroll taxes aren't increased.

The trustees said Social Security will start paying out more in benefits than it receives in taxes as of 2017, just 12 years from now and a year earlier than they predicted a year ago. The 2041 date when the program will go broke also is a year earlier than what the trustees said a year ago.

The Bush administration said the findings show the urgency of its effort to overhaul Social Security. It seeks to do that, in part, by creating retirement investment accounts for younger workers.

Democrats used the relative distance of the dates to oppose the president's efforts to portray the program in crisis, a term Bush has used repeatedly as he has stumped across the country.

Instead, that label might appear to apply to Medicare, the health care program for the elderly and disabled. The trustees, who also oversee that Great Society program, said Medicare began paying out more in benefits than it received in taxes as of last year. They also predicted it will go broke in 2020, a year later than they estimated in 2004, but more than two decades before Social Security.

"The numbers leave nothing to doubt about the financial condition of the Social Security system," said Treasury Secretary John Snow, chairman of the trustees. "The report underscores the fact that we need to do something."

Mike Leavitt, the new Health and Human Services secretary and another trustee, said Medicare and Medicaid - the federal-state health care program for the poor - face daunting financial problems, "but the president has made it clear that we're going to take a discussion to the people on Social Security."

The trustees estimated the premiums Medicare beneficiaries pay for doctor visits will increase about 12 percent next year - from $78.20 a month now to $87.70 in 2005. This year's premiums are 17 percent above 2004.

Leavitt said the administration began to address Medicare in 2003 with new performance standards for doctors, as well as programs that encouraged prevention through things as simple as an annual physical.

Snow said the first of the 78-million baby boomers will begin to retire in 2008, placing unprecedented demand on the system. Not only will that accelerate the rate of benefit payments, but it will also reduce the number of workers paying into the system. The numbers "can't be argued with," Snow said.

Besides Snow and Leavitt, the board of trustees includes Labor Secretary Elaine Chao, Social Security Commissioner Jo Anne Barnhart, and two public trustees, professors Thomas Saving of Texas A&M University and John L. Palmer of Syracuse University.

Information from the Associated Press, New York Times and Knight Ridder News Service was used in this report.

[Last modified March 24, 2005, 01:42:25]