GAO Report Urges Congress to Reform Social Security

August 4, 2003

In a widely distributed column this week, Leigh Strope of the Associated Press comments on the congressional testimony of the Comptroller General David Walker. On July 29, Walker presented the grim findings of the latest General Accounting Office report, "Social Security Reform: Analysis of a Trust Fund Exhaustion Scenario," to the Senate Special Committee on Aging. Excerpts of Strope's column, "Social Security Pain Will Be Less the Sooner Congress Acts," follow:

"The sooner Congress addresses the inevitable decline in Social Security revenue when baby boomers begin retiring in five years, the easier it will be for future generations to keep the system afloat, congressional investigators say.

"'The squeeze on the federal budget will begin as the baby boom generation starts to retire,' Comptroller General David Walker, who heads the GAO, said in testimony prepared for a committee hearing Tuesday. 'Actions taken today can ease both these pressures and the pain of future actions.'

"If no changes are made, recipients would see benefit cuts of nearly a third by 2039, the report said.

"Social Security faces a $3.8 trillion deficit during the next 75 years. Younger Americans must confront a combination of tax increases, cuts in government programs and services and reduced retirement benefits needed to restore long-term financial health to Social Security, the report said.

"But with next year's election already looming over Congress and the White House, little more than campaign rhetoric is expected in the coming year.

"President Bush in his 2000 campaign advocated letting younger workers invest a portion of their payroll taxes in the stock market, helping to shore up future funding.

"Ultimately, the [President's 2001 Commission to Strengthen Social Security] suggested three options instead of one detailed proposal that could tie the White House to difficult and unpopular changes such as raising the retirement age and cutting future promised benefits.

"According to the GAO, further contributing to the problem are increased Medicare costs and changing demographics that 'present an even greater problem.'

"By 2018, taxes paid into Social Security will be insufficient to cover promised benefits. The government also must find a way to pay back the billions of Social Security dollars it has spent and now owes the system. Assuming it can find the money, those funds will be depleted in 2042.

"Last year, Social Security paid nearly $454 billion in benefits to more than 46 million people. Beneficiaries are expected to grow to more than 68 million by 2020 as the large baby boom generation settles into retirement.

"Also, fewer workers will be paying into the system to fund benefits for the huge number of retirees. Falling fertility rates threaten the system's financial future even further. Labor force growth will begin to slow after 2010, and by 2025 it is expected to be less than a third of what it is today."

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