Alan Greenspan, who served as the chairman of the Federal Reserve from 1987 to early 2006, has an interesting perspective on Social Security’s Trust Funds:

Nicholas Ballasy of PJMedia reports:

Alan Greenspan, former chairman of the Federal Reserve, said a Social Security Trust Fund does not exist and that the U.S. is “way underestimating” the size of its national debt.

“The notion that we have a trust fund is nonsense – that trust fund has no meaning whatsoever except for the fact as an all private fund to benefit programs, if it runs out of money, you can only pay out in cash flows that come in but the probability that will happen is not particularly high,” Greenspan told the Fiscal Summit held by the Peter G. Peterson Foundation.

“That means the trust fund is a meaningless instrument that has no function … it’s exactly the same thing as current expenses.”

The Social Security and Medicare Trustees 2014 annual report said while legislation is needed to address all of Social Security’s financial imbalances, “the need has become most urgent with respect to the program’s disability insurance component. Lawmakers need to act soon to avoid automatic reductions in payments to DI beneficiaries in late 2016.”

Speaking of Social Security’s Disability Insurance (DI) Trust Fund, Political Calculations projects that the DI trust fund will be fully depleted either in October 2016 or shortly afterward:

That’s some nine years earlier than Social Security’s actuaries projected back in 2008, and four years earlier than they projected in 2009, just before the official end of the Great Recession. When the DI Trust Fund is depleted, under current law, the cash payments received by all the program’s beneficiaries will be reduced by roughly 20 percent.

The Bipartisan Policy Center has listed a number of the actions that President Obama proposed in his 2016 Budget to address the impending shortfall.

Featured Image: Social Security Adminstration