(CNSNews.com) - President Barack Obama said in Wednesday night’s presidential debate that Social Security is “structurally sound,” but Social Security’s Board of Trustees said in their 2012 annual report that the program faced $8.6 trillion in “unfunded obligations”--meaning that it is currently obligated to pay out $8.6 trillion more in benefits than it is anticipated to bring in through taxes.
During Wednesday debate, moderator Jim Lehrer asked Obama: “Do you see a major difference between the two of you on Social Security?”
“I suspect that on Social Security we've got a somewhat similar position,” Obama responded. “Social Security is structurally sound. It's going to have to be tweaked the way it was by Ronald Reagan and Speaker--Democratic Speaker Tip O'Neill. But it is, the basic structure is sound.”
However, in their annual report published on April 25, the Social Security Trustees said that program not only faces $8.6 trillion in unfunded obligations but that the situation became dramatically worse over the previous year.
“The open group unfunded obligation for OASDI over the 75-year period is $8.6 trillion in present value and is $2.1 trillion more than the measured level of a year ago,” said the trustees’ report. “If the assumptions, methods, starting values, and the law had all remained unchanged, the unfunded obligation would have risen to about $7.0 trillion due to the change in the valuation date. The remaining increase in the unfunded obligation is primarily due to updated data and economic assumptions.”
The trustees point out that a major legislative change that increased the unfunded obligation of Social Security was the cut in the Social Security payroll tax that had been advocated by President Obama. This payroll tax funds the Social Security program.
“In 2011, Social Security’s cost continued to exceed both the program’s tax income and its non-interest income, a trend that the Trustees project to continue throughout the short-range period and beyond,” the report said. “The 2011 deficit of tax income relative to cost was $148 billion, and the projected 2012 deficit is $165 billion. The sizes of these deficits are largely due to a temporary reduction in the Social Security payroll tax for 2011 and 2012.”