Social Security Seeing Red
As we all know, Social Security is heading for the proverbial iceberg. And like the Titanic before her, she is speeding up instead of slowing down and turning away.
According to new CBO numbers, Social Security will begin running deficits - not by 2030, not by 2040 or 2050 – but by 2010! Here is the story from Ed Morrissey @ HotAir.com:
Four years ago, George W. Bush attempted to reform the entitlement program Social Security, warning that the system was accelerating into collapse and would soon run deficits. Democrats scoffed and claimed the Social Security system was solid and wouldn’t have problems for at least 50 years, as Harry Reid told PBS’ Jim Lehrer in June 2005. Just last year, the CBO — under the direction of Peter Orszag, now budget director in the Obama administration — claimed that the first cash deficits in Social Security would not come until 2019.
Now, however, the CBO has determined that Social Security will run cash deficits next year and in 2011, and by 2016 will be more or less in permanent deficit mode. Hot Air has exclusively obtained the summer 2009 CBO report sent to legislators on Capitol Hill but not yet made public, which shows that outgo will exceed income for the first time since the 1983 fix on an annual basis in 2010:
The numbers need explaining. The number to watch is the “Primary Surplus” number, which watches actual income and expenditures without the interest payments from the general fund. The interest payments mask the fact that costs have begun to outstrip income on an annual basis (individual months have gone into deficit in the past). One way to look at this, according to my sources, is to think of this as a mortgage, and in 2010-11, the income can’t make the payments, so the general fund has to cover them. Since the interest obligation compounds, the debt grows.
As we can see, this trend reverses itself temporarily from 2012-15, but the surpluses are minimal. By 2016, the deficits return, and begin to accelerate again. By 2019, the primary surplus runs $63 billion in the red, almost triple the deficit in 2017, showing the rapid decline of the Social Security system.
George Bush, for all his faults, was dead on about this issue while Democrats demagogued it and obstructed, allowing an opportunity to deal with the problem to slip away. Now, while Social Security heads for disaster, Obama & Co. continue to try to ram through asocialized healthcare entitlement we simply can’t afford. To pay for these deficits, there will be no choice but to raid the general fund and bust the federal budget or pass massive tax increases. And guess who is a proponent of that?
Barack Obama thinks that Social Security’s fiscal shortfall is overblown. He opposes private accounts, benefit cuts, or an increase in the retirement age. He writes:
I believe there are a number of ways we can make Social Security solvent that do not involve placing these added burdens on our seniors. One possible option, for example, is to raise the cap on the amount of income subject to the Social Security tax. If we kept the payroll tax rate exactly the same but applied it to all earnings and not just the first $97,500, we could virtually eliminate the entire Social Security shortfall.
That option would be the largest increase in marginal tax rates in decades—larger than the Bush 1990 and Clinton 1993 tax hikes combined.
Gird your loins, my friends. Gird your loins.
