Watching the Republican debates Wednesday evening, you’d think Social Security will be hitting the skids – very soon.
Chris Christie put it this way: “Social Security is going to be insolvent in 7 or 8 years.”
But that’s not really the case.
Here’s the deal: The Social Security Trustees estimate that likely starting in 2034 – 19 years from now – the program will no longer have enough revenue coming in to pay out 100% of promised benefits to retirees on Social Security.
But it will still be able to pay 79% of those promised benefits.
The Congressional Budget Office is somewhat less optimistic. It expects the program will run short as soon as 2029, with a 95% chance it will do so between 2025 and 2040 – or within 10 years to 25 years.
Closer, but still not 7 or 8 years.
All these estimates assume no reforms are made to the program before then.
The left and the right often disagree about how to make the program solvent for the long run.
Revenue for the program comes primarily from payroll taxes. Workers and their employers each pay 6.2% on the first $118,500 of income.
Democrats typically favor high earners paying more in payroll taxes to fund the program. Republicans tend to favor a slowing in the growth rate of benefits, particularly for higher income retirees, and an increase in the retirement age for everyone.
Independent fiscal hawks often recommend a combination of those measures.