Social Security Affected by Recession
May 13, 2009
Social Security, the largest public benefit program, is facing possible financial meltdown as analysts and government officials predicted that its trust funds will be depleted after few years.
Officials said the Social Security trust fund worth $2.4 trillion surplus, will run out by 2037 as the agency will pay more benefits than collect taxes from the public.
Last year, officials said that by 2016, a shortfall will occur as the Social Security will hand out more disability benefits and retirement claims than acquire tax funds.
Experts also said recession has greatly contributed to the looming financial crisis of Social Security since more Americans are now depending on government aid, with fears that the number of beneficiaries will rise as more companies will continue to reduce its workforce up to next year.
According to earlier report, the labor market shed 5.7 million payroll jobs since the start of recession.
The new tax breaks which have been passed by the administration are also blamed to aggravate the financial situation of Social Security.
Meanwhile, the government officials are discussing plans on how to solve the looming financial crisis before 2016—the time when the government has to start paying back the system with interest.
In a statement, political watchdog Concord Coalition said that the Treasury Department should borrow money, cut spending, and raise taxes to avoid the exhaustion of the Social Security Funds in 2037.