Social Security already adding to deficits

Think ProgressMatthew Yglesias writes:

[R]oughly speaking we have two kinds of people in America. We have people who are paying Social Security taxes and we have people who are receiving Social Security benefits. For the past several decades, the quantity of tax revenue coming in has exceeded the quantity of benefits being paid out. That is projected to flip around, creating the need to either redirect some additional financial stream into the Social Security system in order to repay the rest of the government’s debt to Social Security or else to reduce Social Security benefits or else to increase Social Security taxes.

This is almost true. The Social Security system does indeed have a gap between “the quantity of tax revenue coming in” and “the quantity of benefits being paid out.” But this gap is not “projected to flip around.” It already has.

According to The Social Security Board of Trustees 2011 Annual Report, Social Security added paid out $49 billion more than it took in last year, and will pay out another another $46 billion more than it takes in next year.

Yglesias is right: creating private retirement accounts funded by the current Social Security revenue stream would increase deficits. But so would the payroll tax cut extensions in President Obama’s American Jobs Act. No one ever seems to ask Obama about that either.

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