March 29, 2002 | WebMemo on Social Security
On March 26, 2002, the latest annual report of the Social Security's Trustees was released to the public. Most stories about this report focus on obvious facts such as when the trust fund will run out. However, there is much more to the story than just those dates. This briefing gives you an idea of how to get to the important facts behind the obvious in order to get a real picture of Social Security's financial outlook.
This year's 2002 Trustees' Report includes this important information:
What the 2002 Social Security Trustees Report Means:
The only alternative is to allow workers to invest a part of their Social Security taxes in carefully controlled investments. These personal retirement accounts would be called Social Security Part B. The President's Commission to Strengthen Social Security showed that this is feasible and cost-effective. Plans introduced in the House of Representatives and scored by Social Security show that it is not necessary to cut benefits in order to establish personal retirement accounts. Combined, Social Security Part B and the traditional program could pay full benefits to future retirees.
What is the Trustees Report:
Every year, the Social Security Act requires the Trustees of the Social Security trust funds to issue a report on the financial status of those trust funds. They include not only current financial information, but also projections about the funds' ability to finance promised benefit payments in the future. If the report shows that the trust funds will be unable to finance all of these payments (as all recent reports have), the law requires the trustees to recommend ways to make up the shortage. However, this requirement is regularly ignored.
The 2002 Report will be the first one to include the full input of the new public trustees. When they took office in late 2000, the 2001 Trustees' Report was largely complete. Both trustees have spoke about the need to include more and clearer information so that the public can fully understand the state of the Social Security trust fund and the financial challenges that lie ahead.
What is easy to find in the 2002 Report:
David John is a Research Fellow at The Heritage Foundation.