The basic role of the U.S. Treasury is to aid in economic policy, collect taxes, and manage government accounting. Obviously, the Treasury oversees a lot more, but those are its essential functions. When it comes to Social Security, the Treasury maintains the trust funds that fuel the program and investing those funds. The Treasury, along with the Social Security Administration (SSA) and the Fed, are the watchdogs against insolvency. And insolvency remains the number one threat to the Social Security trust.
However, as CNBC’s Thomas Franck reports, the Treasury has updated its outlook on the trust and it’s battle with insolvency.
According to Treasury Secretary Janet Yellen, the Social Security Trust can provide for one more year than predicted. We believed that the trust would be insolvent by the year 2033, but now the reports state that benefits will be covered through 2034. Additionally, the report states that Supplemental Security Income (SSI) and disability benefits are fully funded through the next 75 years.
Yellen said the pandemic recovery is better than expected, resulting in this positive update. Job growth provides higher payroll tax income and Social Security benefit taxes. This economic improvement increases the funding to maintain the trusts and its investments, but does it change the insolvency battle?
When analyzing the Social Security program, the Treasury looks at two trusts specifically: the Disability Insurance Trust and the Old-Age and Survivors Insurance Trust. The Old-Age and Survivor trust deals with Social Security benefits, and is fighting insolvency.
While an added year can provide a sigh of relief to millions of Americans, the problem remains. Social Security is the “third-rail” of our political system, meaning that it is so important that many think it’s best left alone. Our leaders need to realize that while Social Security is essential, it shouldn’t be too sacred to touch. By producing solutions now, we can take our time to see what works to fix the programs problems to produce a permanent fix.
Congress is accountable for the safety of the trusts. Join the Council for Retirement Security, and its fight to protect the Social Security Trust, by demanding Congress make this a priority. An issue this complex needs dedicated time to understand. We take our benefits seriously. The Treasury’s improved outlook is definitely progress, but we still have a way to go.