Social Security Trust Fund – Page 2

Link: https://www.wsj.com/articles/social-security-costs-expected-to-exceed-total-income-in-2021-as-covid-19-takes-financial-toll-11630436193

Excerpt:

Trustees for the Social Security trust fund in an annual report released Tuesday said the program is expected to pay benefits that exceed its income in 2021, the same as it anticipated last year at the outset of the pandemic.
While the pandemic had a significant impact on the program, the trustees said, they expect Social Security’s reserves to be depleted by 2034, only one year sooner than they estimated in their April 2020 report. Once the reserves are exhausted, benefits would be reduced automatically unless Congress steps in to shore up the program, which lawmakers have done previously.
The trustees now project elevated mortality rates related to the pandemic through 2023, and expect lower immigration and child-bearing this year and next, compared with their 2020 estimates. They also expect the pandemic has lowered worker productivity and thus economic output permanently.

Author(s): Kate Davidson

Publication Date: 31 August 2021

Publication Site: Wall Street Journal

Link: https://www.cato.org/sites/cato.org/files/pubs/pdf/ssp6.pdf

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Excerpt:

Given Social Security’s dire financial condition, there is growing interest in attempting to harness the power of private capital markets to bail out the faltering system. However, despite its surface attractiveness, allowing the government to invest funds from the Social Security trust fund in private capital markets would be a terrible mistake that would have severe consequences for the U.S. economy.
…..
Allowing the government to invest the trust fund in private capital markets would amount to the “socialization” of a large portion of the U.S. economy. The federal government would become the nation’s largest shareholder, with a controlling interest in nearly every American company. Government ownership brings with it serious problems of government control and is a threat to the efficiency and competitiveness of the U.S. economy.

Moreover, experience in other countries has shown that government investments seldom achieve the rates of return
seen in private investment. Attempts by the government to manipulate the markets could further undermine returns and threaten general market stability.

Author(s): Krzysztof M. Ostaszewski

Publication Date: 14 January 1997

Publication Site: Cato Institute