A couple reports by the Congressional Research Service…"Maintaining financial balance after trust fund insolvency would require substantial reductions in Social Security benefits, substantial increases in income, or some combination of the two. The trustees project that following insolvency of the combined funds in 2034, Congress could restore balance by reducing scheduled benefits by about 23%; the required reduction would grow gradually to 27% by 2091. Alternatively, Congress could raise the Social Security payroll tax rate from 12.4% to 16.0% following insolvency in 2034, then gradually increase it to 16.9% by 2091."
Social Security: What Would Happen If the Trust Funds Ran Out?
Social Security: The Trust Funds
There is no trust fund. There is only a pile of IOU's issued by the government.
Social Security is now running a deficit. So, the Social Security Administration cashes in some of these IOU's to send money to recipients.
This is known as "'looting the trust fund." That is silly. There is no fund to be looted.
This has always been true. John Attarian explains.
Much of the public is convinced that a perfidious Congress is rifling a "trust fund" where our Social Security taxes are "held in trust" to pay future benefits, that this is why Social Security is headed for trouble, and that all Congress has to do to fix Social Security is put this stolen money back. These beliefs crop up perennially in letters to editors.In July 1998, Carolyn Lukensmeyer, director of the Americans Discuss Social Security project, told the Senate Special Committee on Aging that this alleged raiding of the trust fund to finance other spending is "the real focus of the public's concern." Her poll found that 79 percent of respondents believe that this is one reason why Social Security might experience financial crisis, and 45 percent believe it is the main reason. (Just 26 percent answered, correctly, that the main reason is that the elderly population is growing faster than the number of workers financing the program.)3 Obstacle to Reform
This mentality is a serious obstacle to Social Security reform. If a looted trust fund is the problem, why bother overhauling Social Security? Just make Congress return the money.
Yet this popular belief is utterly mistaken. There is no trust fund, and Congress is doing nothing wrong. What's more, the source of this misunderstanding is the government's own public-relations efforts to create support for Social Security.
The Social Security Act of 1935 created an "Old-Aged Reserve Account" in the Treasury and required that every year an amount determined sufficient to pay that year's benefits was to be appropriated to it. Any of this money not needed for benefits was to be invested in federal debt (including unmarketable debt issued for this purpose) earning 3 percent interest, or other government-guaranteed debt.
He then provides a documented history of the debate over the trust fund. It was recognized early as a public relations scam. He then concludes.