This well’s not dry

Social Security is not running out of money, and it will never completely run out as long as there are workers paying into the system.

President Bush says the system is “headed for bankruptcy.” And he keeps pointing to 2018 as a crisis year.

But economist Mark Weisbrot says, “Even if Social Security cruises along on auto-pilot for the next 13 years, 2018 will arrive and depart quietly and without notice. In 2018 a small fraction of Social Security’s interest income will be used to pay benefits.”

What will happen in 2018, or thereabouts, is that the amount Social Security pays out will be more than it collects in payroll taxes. But that was anticipated. Since 1983 Social Security has collected a surplus that has been put into U.S. government Treasury Bonds to make up any shortfall. This is exactly what was intended when President Reagan and Congress raised the payroll tax in 1983.

For instance, in 2003 Social Security collected $632 billion, but it paid out only $471 billion. By 2018 the surplus should be more than $5.3 trillion.

Social Security trustees say that surplus might run out in 2042 if their pessimistic assumptions about the U.S. economy come true. The trustees base their projection on a 1.8 percent economic growth rate. The U.S. economic growth rate for the past 75 years has averaged 3 percent. Even during the 1930s — the decade of the Great Depression — the U.S. economic growth rate was higher than 1.8 percent.

According to the nonpartisan Congressional Budget Office, which assessed the economic growth rate at 1.9 percent, the surplus won’t run out until 2052.

At that point, without any changes, Social Security will be able to pay about 75 percent of promised benefits.

But the U.S. economy has grown at an average 3 percent rate the last 75 years. If the U.S. economy grows at only a 2.5 percent rate over the next 75 years, Social Security will be secure into the foreseeable future.

By the way, projections of when the supposed Social Security shortfall will happen have moved back over the years. In 1997 administration trustees said 2029; now they say 2042. In fact, those projections have always been a moving target. Every year that date has changed.

Here is what the trustees said would be the trust fund exhaustion date from 1998 to 2003:

Why did the exhaustion dates change? A primary reason is the U.S. economy performed better than the trustees predicted.