A recent dust-up between the LA Times and Time’s Money Magazine has illuminated some of the difficult solvency questions surrounding Social Security.
In a November piece contextualizing Social Security within the 2016 Presidential election,
editor-at-large Penelope Wang remarked that “the program has been running at a deficit since 2010.” This is true if you look at Social Security’s finances
purely in terms of benefits paid relative to taxes levied; however, as Michael Hiltzik
commented in his column at the LA Times, taxes are not the Social Security system’s only source of income.
The program’s revenues also include the interest on Social Security’s treasury bonds. Accounting for this interest—as the Social Security Trustees do in
their reports—leaves the program with a $23 billion dollar surplus for last year. Hiltzik believes Wang’s omission of this interest income in her analysis
implies a lack of faith in Social Security’s treasury bonds, which critics frequently deride as “IOUs.”
Wang, Hiltzik, and the Social Security Trustees all acknowledge that the trust fund is set to exhaust in 2034, at which point benefits will fall to 79%
of the promised payout. This worst-case-scenario assumes total inaction on the part of Congress.