Wednesday, January 26, 2011

It's Starting: Social Security Will Be in the Red Permanently from Here on Out...

....without massive cutbacks of one sort or another. This year the Social Security Administration, like last year, will pay out more money than it takes in. It now appears to be a permanent situation. SS isn't technically bankrupt yet, it can reduce the size of the Treasury security portfolio it holds to  make up the difference, but this just puts added pressure on the Treasury.

Here is WaPo with the very ugly details:
Sick and getting sicker, Social Security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037, congressional budget experts said Wednesday in bleaker-than-previous estimates.

The massive retirement program has been suffering from the effects of the struggling economy for several years. It first went into deficit last year but had been projected to post surpluses for a few more years before permanently slipping into the red in 2016

This year alone, Social Security will pay out $45 billion more in retirement, disability and survivors' benefits than it collects in payroll taxes, the nonpartisan Congressional Budget Office said. That figure nearly triples - to $130 billion - when the new one-year cut in payroll taxes is included
Most telling is WaPo's hint at the real problem, which I pointed out back in 2009 (My emphasis):

Social Security has built up a $2.5 trillion surplus since the retirement program was last overhauled in the 1980s. Benefits will be safe until that money runs out...The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment, with interest.
Got that? The Treasury doesn't have $2.5 trillion to pay to the Social Security trust fund. The Treasury is in hawk for $14 trillion. Further, there is no end in sight to additional deficits, meaning a climbing debt load for the Treasury.

There is no way this entire thing doesn't explode at some point. Either Bernanke starts to print like Robert Mugabe or the government is going to have to cut back big time, including on SS benefits. Former Treasury Secretary Robert Rubin wasn't kidding when he wrote the debt crisis could explode at any minute. It starting already. That screeching noise you here is the debt balloon stretching to its max. You know what happens next.


  1. This fund will fail much sooner then they predict. Think of a bank when its depositors realize that they may not be able to get all of their money out before it closes its doors. While I don't think it will close its doors so long as there is a spineless politician to hold them open, I do think people are going to opt for benefits as soon as they are available rather then waiting and taking a chance of getting a haircut. Things rarely fail in a linear fashion, yet economists and politicians love to make us beleive that.

  2. There is NO SUCH THING as a SS "Trust Fund" with any $$$ in it. NONE!

    The Supremes have ruled in 2 cases that 1: SS is NOT an "Insurance Program" and 2: No Congress can "obligate" a future Congress to fund this nonsense. All revenues go into the general fund and come from the general fund (Supreme Court case names available on request.)

    "Where's the rest of me?"

    There never was a "rest of me".


  3. As for all of us has anyone looked at there payroll deduction lately on there pay stub, well the federal amount is higher and the social security is lower .all the monies are going to pay back the fereral defacit.... were all paying back they make it seem that were getting mpore in our salery but my pay has gone down 40.00 a week look at your paystub....

  4. Only the absolute morons in this world pay taxes.


  5. The sooner Social Security and the government fail, the faster we can get on with building a sound economy.