Going to get ugly sooner than later.
Recession Bites Into Social Security’s Surplus: Kevin Hassett - Bloomberg.com
We have all been so busy whining about bonuses at American International Group Inc. and arguing about the so-called card- check legislation that we forgot to watch the Social Security surplus. While we were looking away, that surplus disappeared, eight years ahead of schedule.
Something extraordinarily important was revealed in mid- March and received almost no news coverage. If you typed in the words “Social Security” on Google’s news service last Friday, the top hit was a New York story about a man who kept his dead mother in a freezer ever since she died back in 2007, just so he could continue to collect her benefit checks.
Almost as gruesome is the news about Social Security’s finances. Social Security has for years been the near-term bright spot in the federal budget. Each year the program has raised $50 billion to $100 billion more in payroll taxes than it paid out in benefits. Sure, deficits were expected far off in the future, but the current program was on sound financial footing.
Those days are, for the moment at least, behind us. According to the latest Congressional Budget Office estimate, the Social Security surplus will be only $3 billion in 2010. That number is almost surely too rosy, and the actual realization next year will be a big deficit. In February, according to data from the Social Security Office of the Actuary, the program paid out more in benefits than it collected in taxes and interest combined. There will be many more months like that before we are through.