Social Security- Negative Budgetary Pressures


Negative budgetary pressures

The negative pressures on the US federal budget are likely to be experienced before 2018. For many years, the Social Security surpluses have been serving as an important source of revenue for the federal budget. In fact, in 2004 the US Treasury obtained a loan of USD $ 159 billion from Social Security to carry out several government programs. In the absence of this loan amount, the budget deficit would have been much more than USD $ 413 billion.
When Social Security surpluses begin to diminish, there would be tremendous pressure on law and policy makers to reduce expenditure or increase taxes to negate the effect of negative budgetary pressures.A gradual decline in Social Security surpluses will take place till the year 2017.


If corrective measures are not implemented, the pressure on tax payers will remain till the year 2042 and beyond. The tax payers may be required to pay billions of dollars in taxes, in order to meet deficits in the federal budget.

What are these different ideas on the future of Social Security?
There are two distinct ideas regarding – the future of Social Security. One option is that a portion of Social Security contributions can be set aside and invested in the employee’s 401(k) plan. Others feel that Social Security should run as it is and, if circumstances demand, the Congress can intervene with legislation to keep the fund solvent by increasing revenues to or reducing payments from Social Security. Thus, there are a number of concerns regarding the future of Social Security and Medicare and a number of proposals have been floated to address these issues. A perennial issue is that Social Security and Medicare solvency are long term issues demanding long term solutions, and politicians, by nature, have a short term focus.


If you wish to read more about this, you should visit the “Future of Social Security” segment of “RetirePlan.About.Com.”

    Quick Links