By John Scorza, Washington Staff Writer
Social Security's long-term financial outlook improved slightly, according to the latest report from the Social Security and Medicare Board of Trustees. But the outlook is hardly cheery, and the report prompted calls from politicians to reform the system.
The report concluded that the Social Security trust funds will become exhausted in 2041. That is one year later than last year's projection. The projected point at which Social Security benefits will exceed payroll taxes will be 2017, which is the same year as projected by last year's report.
Over a 75-year period, the trust funds would require $4.7 trillion to pay all scheduled benefits. In order to fix the system indefinitely, the combined payroll tax rate would have to be raised immediately from 12.4 percent to about 15.9 percent, or benefits reduced immediately by 22 percent, according to Treasury Secretary Henry M. Paulson Jr., one of the trustees.
"Reform is needed and time is of the essence," Paulson said. "The longer we delay, the larger the required adjustments will be--and the burden of making those adjustments will fall more heavily on future generations."
Rep. Jim McCrery (R-La.), ranking member of the House Ways and Means Committee, joined other politicians in calling for reform. "The sooner we grapple with these problems, the easier they will be to fix," he said. "We are dooming our children and grandchildren to a future of massive tax increases and reduced prosperity if we stick our heads in the sand."
Efforts to reform the system failed in the last Congress, in large part because of Democratic opposition to President Bush's stance that private investment accounts should be part of the reform negotiations. The 2008 presidential elections are sure to complicate serious reform efforts again.
Other highlights of the 2007 Trustees Report, as detailed by the Social Security Administration, include:
- During 2006, an estimated 162 million people had earnings covered by Social Security and paid payroll taxes.
- Social Security paid benefits of $546 billion in calendar year 2006. There were 49 million beneficiaries at the end of the calendar year.
- The cost of $5.3 billion to administer the program in 2006 was a 1.0 percent of total expenditures.
- Related items:
- Bush Rules Out Payroll Tax Increases as Part of Any Social Security Fix
Added to the news on June 13, 2007.
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