Social Security coming up short (spending more than it takes in)
Although it's far from a surprise and has long been predicted, it's finally a reality: Social Security is now officially paying out more than it is taking in.
Of course, Social Security has taken in more than it has paid out pretty much since its inception...which would lead a normal person to think there's a big fat piggy bank just waiting to pay out all those benefits, right? Wrong. The truth is that the government has faithfully borrowed every dime of that surplus over the years and spent it on, well, everything.
Bruce Krasting looks at the public data on the Social Security "Trust Fund" and points out that the numbers are headed in the wrong direction...pointing out that this wasn't expected to happen for another five years or so.
This is the cost of the protracted recession and the failure of the
economy to generate new jobs. The 2008-2009 increase in benefits was at
a nosebleed level of 9.5%. That level has collapsed to 3.9% in the
2009-2010 period. ...
Most analysts, the CBO and the SSTF look at the Fund’s results in the
context of a 75-year time horizon. Some point to a date in 2037 as a
point where SS “may have problems”.
I leave that discussion to others. It has been well proven that we
can’t look two years into the future with any degree of accuracy. I
prefer to look at the here and now and focus on cash flow. ...
So what now? First, Congress no longer has the annual Social Security surplus to borrow and spend on other things, (this is the money they borrow and spend in addition to selling bonds). With no more surplus they'll have to sell more bonds, (essentially holding our hands out to investors from other countries).
Second, not only can they no longer borrow the surplus every year, but in order for the Trust Fund to pay out the benefits, Congress has to find money to pay BACK to the Trust Fund...which means they will probably begin borrowing from Peter, to pay back Paul the money they previously borrowed to pay Peter.
in other words, we're heading (earlier) towards the need for a Social Security bailout.