According to Business Insider, the Social Security program is not the only cause of America’s budget problems, but it is a big reason of why it is so hard to fix them. The program accounts for about 20 percent of all federal spending and within a few decades will count almost a third of our population as its beneficiaries. Several misconceptions came up recently with the recent talk of government budget cuts.
The Social Security program did not create the deficit, from 1983 until last year, its revenues lowered the Treasury’s need to borrow in the public markets with the help of the excess payroll taxes collected for the retirement system. However, the surplus years are over. In 2010, payroll taxes fell short, largely due to the recession and high unemployment rates. As baby boomers begin to retire, there will be less surplus and more of a need to pay out.
The Social Security Administration’s website calls the benefits “earned credits” and sometimes refers to payroll taxes as contributions. However, the Social Security trust fund is not a private pension found, no one ever vests in Social Security and they never own their benefits until they cash the check out.
The Social Security fund which collects all the surplus payroll taxes collected from working Americans, is large enough that the program does not need to ask for money until 2037. If there is no program changes, the trust fund will run dry.