The claim of a 2.2 percent solution is based on a measure of Social Securitys fiscal health, called actuarial balance, which counts surpluses accumulated in the programs trust funds as genuine savings. But the trust funds contain nothing but a stack of Treasury IOUs that will require additional taxes or borrowing from the public to redeem. The more accurate measure of Social Securitys fiscal health is the programs operating balance — that is, its annual earmarked tax revenues minus its annual outlays. That balance is projected to turn negative in 2013 and widen to an annual deficit of $734 billion, or 4.8 percent of payroll, by 2031, the last full year the trust funds are technically “solvent.” Even if the 2.2 percent solution were enacted, Social Security would still face large and steadily growing operating deficits starting in 2020.
Entirely apart from the savings fallacy, there are other serious problems with the 2.2 percent solution: