Social Security is the Titanic Headed for the Iceberg

Sens. Elizabeth Warren (D-MA) and Joe Manchin (D-WV) recently called for the expansion of Social Security benefits. This despite the fact that current benefits can't even be paid for.

Andrew G. Biggs explains:

There is bad news to come regarding Social Security – not merely for the “1 percenters” but for ordinary Americans, who must either pay more to Social Security or receive less from it. Expanding Social Security, as some of members of Congress have proposed, isn’t rearranging the deck chairs on the Titanic. It is like adding more passengers. 

The Congressional Budget Office (CBO) recently released its latest financing projections for the Social Security program, showing a long-term funding shortfall that has more than quadrupled since 2008. The program’s trust fund, which in 2008 the CBO projected would last until mid-century, is today projected to run out two decades earlier, in 2029. At that time, by law, benefits would be cut across the board by one-quarter...

Biggs is being extremely limited in his warning. Social Security will  turn significantly cash flow negative within a couple of years. The only way the Treasury can fill the cash flow gap is by going out and borrowing money. At some point that is going to get extremely burdensome and extremely expensive as the Treasury faces a climbing interest rate environment.

Note to the wise: Don't count on your SS benefits.

-RW