Social Security Is NOT a Main Driver of the Country's Long-term Budget Problem!

[exboyfil]

4. I don't think main driver

Last edited Sun Oct 9, 2016, 11:28 AM - Edit history (2)

but at the end of Hillary Clinton's first term, the Trust Fund with its Treasuries will start to be drawn down. In approximate terms this will be $200B/yr. for 15 years. After the 15 years then Social Security will have depleted all of its Trust Fund and then start paying around 70% of its current benefits.

This happens if nothing in the law is changed.


The $200B/yr. will have to come from additional borrowing by the Treasury, reductions in current federal programs, or additional taxes.

The current federal budget is about $4T/yr. The federal debt is about $20T. The current federal deficit is about $500B. Our current GDP is $17T. We have one of the highest debt to GDP ratios of a large liberal democracy. Our GDP growth rate is at 1.4% but has been around 2% during Obama's presidency (about 2% lower than Clinton's presidency).

Our current 10 yr. Treasury rate is 2%. Historically this is much higher (for example during Clinton's presidency it was 6-7%. In our current budget deficit we borrow about $220B to cover interest on the debt. So if it costs more to borrow that amount will also increase (lets say to $600B). That is also money that must be borrowed, made up in cuts, or additional taxes.

A fourth option to address the federal debt would be allowing inflation to take off (monetizing the debt). This would hammer everyone.