Thursday, April 1, 2010

CBO director’s blog on Social Security finances

The very useful CBO director's blog has a nice post about the state of Social Security's finances, which have gotten some publicity lately due to CBO's projection that the program will run an almost $30 billion cash deficit this year. Director Elmendorf gives a good explanation of what's going on, what's driving the changes, and what they do and don't mean for the program.

I particularly like one explanatory passage regarding the Social Security trust fund, for those who like to think that the fund's balance means the government won't have a problem paying for Social Security:

The balances credited to the trust funds are a measure of the government's legal authority to pay Social Security benefits, but the resources to redeem government bonds in the trust funds and thereby pay for benefits in some future year will have to be generated from taxes, other government income, or government borrowing in that year.

Click here to read the whole post.


弘綸 said...
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James said...

The paragraph sums it nicely, doesn't it? And on paper at least the fix for the shortfalls in terms of the need to find new funding - that is to say, real dollars - to cover the shortfalls may be straightforward but in practice, for both political and fiscal reasons, I suspect a solution may be much more elusive.

I think it will be very interesting to see what the current administration proposes in the months ahead.