Social Security
Social Security refers to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program passed in 1935. Social Security is a social insurance program that is primarily funded through dedicated payroll taxes called Federal Insurance Contributions Act tax (FICA). Tax deposits are formally entrusted to the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance Trust Fund. According to the 2012 Annual Report of the Social Security Trustees, Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that this deficit will continue. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033.
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Fertility Rate Decline Is The Elephant in the Room

5/3/13
from NCPA,
5/3/13:

For 200 years, academics have predicted a demographic crisis, one of epic proportions as the world's population would theoretically outpace the world's ability to support such a large number of people. Malthus predicted massive famine, Margaret Sanger bemoaned the high reproductive habits of less intelligent people, and today's environmentalists worry that too many people will overload the natural world's resources and create too much pollution. In reality, modern population projections show that the population will never reach these levels, which will have a different set of consequences, says Bruce Thornton, a research fellow at the Hoover Institution.

Women must average a total fertility rate (TFR) of 2.1 children apiece for populations to remain stable. In the developed world, and even in the developing world, fertility is below the 2.1 mark, meaning that populations are declining. Japan and Italy have a TFR of 1.4, which means their populations will decline by 50 percent in 45 years. The European Union has an average TFR of 1.5, and by 2050, only three countries in the EU will not be experiencing population declines.

Compared to the rest of the world, the United States' 2.0 TFR looks good; however, the number is largely dependent on the fertility rate of Hispanic women, which is 2.35. If Hispanic fertility rates drop in the United States as expected, the U.S. TFR would drop substantially.

A country with fewer children becomes, on average, increasingly older. Old people spend less and invest less, shrinking capital pools for the new businesses that create new jobs. Entrepreneurs do not come from among the aged.

Most important, a shrinking labor force means fewer workers contributing the payroll taxes that finance old-age care. The U.S. Social Security program is already beginning to be impacted by the decline in the worker-to-retiree ratio.

In 1940, there were 160 workers for each retiree. By 2010, there were just 2.9.

This means taxes will have to increase and benefits be cut substantially to keep the program solvent. Medicare is similarly threatened by declining fertility. Both programs will cost more but have fewer workers footing the bill.

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