The Social Security Commission issued their annual report. It can be found at www.socialsecurity.gov
Yesterday I heard Rush tell his audience that the reason that we have not found a solution was because people and Congress would not listen to the solution Bush made for the system. The real reason is that what Bush suggested was not accepted is that it was NOT A SOLUTION. The change he proposed had NOTHING to do with the issue at hand - HOW TO PAY THE FULL SOCIAL SECURITY BENEFITS TO THE Baby Boomers. Because of the larger then normal births after WWII, we will see a drop of 3.5 workers paying taxes for every 1 retired person to about 2 people working for every 1 retired.
Today at 3.5 to 1, the Social Security System is solvent. In fact in 2005 Social Security had a surplus of $173 Billion. As the ratio of working to retired drops that surplus will turn into a deficit. In 2017 the current tax revenue and benefits will be equal and starting in 2018, funds will need to be removed from the $1.3 Trillion trust fund. That trust fund will be exhausted by 2040 at which time without additional funding Social Security would only be able to pay about 73% of the promised retirement benefits. The Trust Fund consists of IOU's from the Fed which will either have to redeemed by new debt or by increased taxes when it becomes time to supplement the Social Security Tax Revenue starting in 2018. When the Baby Boomers bubble passes and we return to the 3.5 people working for every person retired, the Social Security System should return to the condition like today and again be solvent.
What Bush suggested was to deal with the retirement of the generation FOLLOWING the Baby Boomers by creating the private accounts. That has NOTHING to do with the problem at hand - HOW TO PAY FOR THE Baby Boomers. In fact it makes the funding of the Baby Boomer retirement even worse by the diverting of SOME of the tax dollars that are currently intended to be paid to the Boomers into the private accounts. In other words, Bush made the Baby Boomer problem worse and proposed a solution for a time that will most likely be self -correcting after the Baby Boomer Bubble passes and we have 3.5 workers paying taxes for the 1 retired person.
The issue is NOT that people rejected the Bush solution. It is that what Bush wanted to do WAS NOT A SOLUTION!