March 23, 2005
Statement of Robert Greenstein, Executive Director, Center on Budget and Policy Priorities, regarding the report issued today by the Social Security and Medicare Board of Trustees
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The new trustees' report provides further evidence that Social Security more closely resembles a house with a leaking roof in need of repair than a house that is built on quicksand. Social Security will be able to pay 100 percent of promised benefits until 2041 (the year in which the trustees predict the trust fund will be exhausted) and 74 percent of promised benefits thereafter.
The program faces a significant long-term funding shortfall that must be addressed, but it is not in the midst of a deep structural crisis that requires drastic changes. And nothing in the new report indicates that replacing part of Social Security with private accounts, as the Administration has proposed, would be useful; the President's private accounts would do nothing to close the shortfall. In fact, because the President's proposal would shift large amounts of revenue out of Social Security, it would cause the trust fund to become exhausted about 11 years sooner, in 2030, unless it is coupled with large reductions in Social Security benefits.