Social Security on Solid Ground, Government Report Finds

Headlines about Social Security's future have been dire for years. Now a report from the nonpartisan Congressional Budget Office says we can stop sounding the alarms: Social Security will be on solid ground for decades to come.

The report looks ahead 75 years, when benefits will be higher than they are today, and finds that the Social Security surplus will be able to pay full benefits until 2049 and that incoming revenues will be able to pay 81 percent of benefits through 2082.

"The trust fund will cushion the large baby boom retirement, as it was designed to do, but most benefits will continue to be funded by direct transfers from workers to retirees, as they are now," said Monique Morrisey of the Economic Policy Insitute.

Growing income inequality will cause the modest shortfall expected after 2049, she said. As most workers' earnings have stagnated, those at the top have skyrocketed, putting a greater percentage of wages outside the cap (now $102,000) set for Social Security taxes.

Morrisey's solution is one favored by Senator Barack Obama: raising the cap on taxable earnings for those with higher salaries.

Morrisey's policy paper on the CBO report is available at www.epi.org.