Social Security hits six-month mark on cash deficits

posted at 2:30 pm on December 8, 2009 by Ed Morrissey

The Social Security trust fund has been on a record-breaking losing streak this year.  Chuck Blahous, former Deputy Director of the National Economic Council, notes that the fund has operated on a cash deficit for six months in a row — the first time that has happened in the 22 years that the fund has reported on its monthly status on line.  It signals that the fund will go broke faster than anyone predicted:

Data recently made public by the Social Security Administration confirm that in October, 2009, the program reached a grim milestone:  six consecutive months of operating cash deficits.  This is the first time Social Security has faced this situation over the entire time period, dating back through 1987, for which SSA posts the monthly data online.

From May through October inclusive, Social Security’s outgoing payments have exceeded incoming program revenue, generated mostly by the payroll tax (with a smaller amount coming in via the taxation of benefits).  When a cash-deficit situation develops during a period that the program is still technically solvent, full benefits continue to be paid.  The operational deficit is effectively made up with general revenues, putting additional strain on a sagging federal budget.

The primary reason for the early arrival of Social Security’s deficits is the recession, which is depressing payroll tax revenue.  The drop in employment, and its corollary effect on payroll taxes, is coinciding with a long-anticipated surge in benefit claims as the Baby Boomers begin to hit the retirement rolls.  These factors have combined to accelerate Social Security’s financial difficulties relative to previous projections.

At the same time, its fund assets have increased by$42 billion.  How can that be?  Well, the fund’s assets are primarily IOUs from the federal government, which has used Social Security income to fund its own operations.  If the government held no debt and ran in the black, this would be no problem — but if it did that, it wouldn’t need to issue IOUs, either.

This wasn’t a big problem while the cash revenues covered the outlays, or at least not a big short-term problem.  The fund could pay its own obligations and the surplus could get eaten up by the federal government without causing any issues on benefits.  Those days are rapidly coming to an end.  If the revenues continue to fall short of the outlays, the federal government will have to start paying back the money — and that means more debt and more deficit spending.

By next year, we could be in full-blown deficits at SSA, and Blahous explains what that means:

It is too soon to tell whether the half-year of persistent monthly deficits will soon translate into full calendar years of net deficits.  If these annual deficits arrive by next year as predicted in the September baseline of the Congressional Budget Office (CBO), this will be significantly sooner than either they or the Social Security Trustees have previously projected.  In 2008, CBO predicted that cash surpluses would persist through 2019.  The Trustees’ projections for the onset of cash deficits have since 1983 ranged from 2012-2021.  Like those of other government forecasters, these projections failed to predict the depth of the recent recession. …

Seniors will continue to receive their Social Security benefit checks despite Social Security’s grim half-year of operating in the red.  The early arrival of a half-year of consistent monthly deficits, however, should serve as a wake-up call that like other forms of retirement income, Social Security finances are being hit hard by the recession.  The necessity of repairs to the program’s financial outlook is growing more urgent than previously supposed.

Who were the people who failed to predict the onset of crisis at SSA?  Not Blahous; he and the Bush administration warned about it at least as far back as 2004, and in 2005 attempted to restructure SSA to restore some fiscal stability.  The current budget director, Peter Orszag, was among those insisting that SSA would have no deficit issues for another ten years when he ran the CBO in 2007-8.  He proved just as accurate this year when Orszag undersestimated the ten-year deficit projections by 44% — a mistake that missed $2.2 trillion dollars of debt.

Update: Blahous was not on the Council of Economic Advisers, as I originally wrote; he was Deputy Director of the National Economic Council.

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All is well…Obama is going to have a SS beer summit!

trs on December 8, 2009 at 2:33 PM

Don’t be so glum! They’ll just print more money — problem fixed!

John the Libertarian on December 8, 2009 at 2:34 PM

All I want for Christmas is the death of the health care bill. As long as this news helps it die, I’m good.

parteagirl on December 8, 2009 at 2:34 PM

I wonder how grateful the administration is to Tiger Woods right now.

Tonus on December 8, 2009 at 2:34 PM

Does the GOP really want to go against ObamaCare given the success of SocSec and Medicare?

-

WashJeff on December 8, 2009 at 2:35 PM

No wonder they want the Death Panels up n running…

hawkman on December 8, 2009 at 2:35 PM

No problem. All we have to do is pass Obamacare, Cap and Trade, a couple more trillion-dollar stimulus packages, and everything will just fall right into place.

UltimateBob on December 8, 2009 at 2:35 PM

The only thing that can save this is Health Care Reform.

/libtard

cntrlfrk on December 8, 2009 at 2:35 PM

The good news is if health care is passed, they can accelerate the death panels and get some of those freeloaders off the records….another reason to pass the health care, in 5 years, SS will be in the black (so to speak)…

right2bright on December 8, 2009 at 2:35 PM

The Social Security trust fund is racist.

Good Lt on December 8, 2009 at 2:37 PM

Now you can understand why the White House has a belated sense of urgency about job creation. They have seen these numbers. Obama does not want to be the first President to have to ask Congress to appropriate funds from general revenues for Social Security. The public will be rightly outraged if that happens, after 60 years of proaganda that SS is an “insurance” program that “pays for itself.”

rockmom on December 8, 2009 at 2:37 PM

But Obama promised this morning he would halve the debt!

gwelf on December 8, 2009 at 2:37 PM

Don’t worry, ObamaCare is a jobs program and a Social Security program.

myrenovations on December 8, 2009 at 2:37 PM

it is the red rum on SS.

upinak on December 8, 2009 at 2:37 PM

good thing Moses is up there raising his hand and lifting countries and all…

just needs a “staff”….Rahm, Rahm!

ted c on December 8, 2009 at 2:38 PM

Your money’s no good here, Mr. Torrance.

DrSteve on December 8, 2009 at 2:38 PM

Change!

ornery_independent on December 8, 2009 at 2:38 PM

FYI…My Grandma cannot eat an IOU.

milwife88 on December 8, 2009 at 2:39 PM

In the Christmas [Story] spirit…Fuuuuuuuuudge!

Party like your Tiger Woods, then end is near! ;-)

WashJeff on December 8, 2009 at 2:39 PM

They’ll just print more money, and you’ll have your Social Security, and you can use it to make payments on the used Ford van that you’ll be living in.

RBMN on December 8, 2009 at 2:39 PM

Where’s that lockbox? Did Al Gore take the key with him when he left the White Hosue?

UltimateBob on December 8, 2009 at 2:41 PM

See – the federal government can totally handle taking over 1/5th of the economy and run healthcare to pay for more care for more people at lower cost and still reduce the deficit!

gwelf on December 8, 2009 at 2:41 PM

Osama Obama should click on the ad I’m seeing on the page below Ed’s post: “Yes you can! Debt of $10,000 or more? Click here for help!”

Has a nice picture of the Chicago Jesus on it, too….

MrScribbler on December 8, 2009 at 2:42 PM

Now how did I miss that in my analysis from yesterday?

steveegg on December 8, 2009 at 2:42 PM

I can’t wait for the Democrats to blame Boooooooooooosh for this one.

gwelf on December 8, 2009 at 2:43 PM

I wonder if the fact illegals steal SS#, work two weeks and get SS money for the rest of their life has anything to do with this money short fall?
L

letget on December 8, 2009 at 2:44 PM

Hey, I’ve got a great idea. Let’s give free health care to everyone!

Cicero43 on December 8, 2009 at 2:46 PM

I can’t wait for the Democrats to blame Boooooooooooosh for this one.

gwelf on December 8, 2009 at 2:43 PM

Booooooosh had 8 years and did nothing about SocSec!!!

WashJeff on December 8, 2009 at 2:47 PM

They’ll just print more money, and you’ll have your Social Security, and you can use it to make payments on the used Ford van that you’ll be living in.

RBMN on December 8, 2009 at 2:39 PM

You rich guys with your Ford vans to live in.

Cicero43 on December 8, 2009 at 2:47 PM

Do all idiot’s last names start with an “O”?

txag92 on December 8, 2009 at 2:47 PM

This is not going to end well.

Johnnyreb on December 8, 2009 at 2:48 PM

Hey, I’ve got a great idea. Let’s give free health care financed by China to everyone!

Cicero43 on December 8, 2009 at 2:46 PM

FIFY

WashJeff on December 8, 2009 at 2:48 PM

All of the government ponzi schemes come crashing down, too bad it’s all hsppening at the same time. We are in serious doo doo in this country and very few people realize it.

hip shot on December 8, 2009 at 2:48 PM

Historic!

Unprecedented!

SMART Power!

jukin on December 8, 2009 at 2:50 PM

Wait a minute. A Tiger minute, apparently. Why is this not big news?
Screw the climate and the rest of the Obama b.s. this is big news.
Maybe that 200 not spent on TARP should go to SS. Oh yeah, wait a minute, we don’t really have that 200 either.
What a mess. I know they will blame Bush but that is b.s. as well. Congress spends and Obama spends more. They obviously didn’t expect that ss would be broke. I love messes for Obama but I wish this would get more attention.

ORconservative on December 8, 2009 at 2:50 PM

It’s like being on the Titanic and watching the waterline rise.

But this time no one is getting the life boats ready, they are punching more holes in the mast.

Stephanie on December 8, 2009 at 2:50 PM

Hu Jintao: “Just so we are clear: You are not allowed to pay us back in clunkers old people.”

Kafir on December 8, 2009 at 2:53 PM

It’s just the beginning. Wait till the boomers retire. That would be what you’d call “end game” for these social programs.

lorien1973 on December 8, 2009 at 2:54 PM

Your money’s no good here, Mr. Torrance.

DrSteve on December 8, 2009 at 2:38 PM

Top 10 Best Scenes in Cinema

“… and when my wife tried to prevent me from doing my duties, I corrected her.”

John the Libertarian on December 8, 2009 at 2:55 PM

Wait a minute. A Tiger minute, apparently. Why is this not big news?

ORconservative on December 8, 2009 at 2:50 PM

C’mon, when have government deficits and debts ever adversly effect anyone in this country? Since nothing super bad has happened in the past, nothing bad will happen in the future. :-/

Oh yeah, if you have any personal financial hardships, just spend more money (per the government’s lead).

WashJeff on December 8, 2009 at 2:56 PM

And Reid and Pelosi still have the hypocrisy to ask for larger Social Security System through the so-called Obama Death Care?

What kind of Government is this? Oh my! America has just been punked!

TheAlamos on December 8, 2009 at 2:56 PM

ObamaCare will solve this mess by prematurely killing off all the old people who are sucking the Social Security system dry.

See? Sometimes government intervention does work.

Cicero43 on December 8, 2009 at 2:58 PM

Historic!

Unprecedented!

SMART Power!

jukin on December 8, 2009 at 2:50 PM

Indeed. Indeed.

TheAlamos on December 8, 2009 at 2:59 PM

Time to file ‘retirement’ in the dictionary of obsolete words.

Dark-Star on December 8, 2009 at 3:01 PM

Where do Obowma and the rest of the statists think we’re going to get the money for all of this?

They have to be looking at these numbers, who do they think they’re going to rob to pay for Soc sec and the rest of these new entitlements?

Juno77 on December 8, 2009 at 3:06 PM

sont worry Obama is coming to gut our SS like he is doing with Medicare

right on schedule for Gen X to get frakked yet again

I have thought for a while he was ‘selected’ so they could have a Dem cut SS as the Boomers started retiring, in the vein of only Nixon could go to China

he already has his ‘bipartisan’ panel ready to go..how we can work another 15 extra years with no Zimmer hip or knee replacements I have no idea

ginaswo on December 8, 2009 at 3:06 PM

It’s just the beginning. Wait till the boomers retire. That would be what you’d call “end game” for these social programs.

lorien1973 on December 8, 2009 at 2:54 PM

What do you mean? According to ObamaCare we can extract great savings from these people when they government is in charge of their healthcare. =)

gwelf on December 8, 2009 at 3:11 PM

Do you mean to tell me, picking the pockets of our children and grandchildren to support our retirement and health care needs, isn’t a good idea?

Go on

franksalterego on December 8, 2009 at 3:13 PM

No one in my generation ever expected to get a thing from SS… in the mid-80′s the ‘crisis’ of SS was already predicted for 2050. Then moved back to 2030 during the ’90s. By 2007 it was 2020. Last year it was 2016.

The ‘lockbox’ is full of government IOUs due to the government taking the SS money during the 90′s and spending it. Thanks to spendthrift Republicans and Democrats on that one… there was never any ‘lockbox’, just a bunch of promises to pay back the fund.

Any guess for a date on when SS goes insolvent, has to use its ‘lockbox’ and the federal government’s debt makes this year look like a minor hiccup? I’m placing it on 21 DEC 2012, which is a popular date for disasters. Unfortunately that is probably optimistic.

ajacksonian on December 8, 2009 at 3:13 PM

I wish there was someone in D.C., that cared. Kick that can down the road.

Cindy Munford on December 8, 2009 at 3:26 PM

Peter Orszag evidently got his math degree at the CRU in Britain.

GarandFan on December 8, 2009 at 3:28 PM

This is another fine example of how wonderful government programs are. These programs always deliver and never go insolvent. /s

America’s credit cards are maxed out. When the debt gets called, the only options will be to file bankruptcy, hand over the the keys to the debt holders, or seize even more of the individual’s income.

Say goodbye to the standard of living that we enjoy. We are doomed.

rukiddingme on December 8, 2009 at 3:34 PM

But Obama promised this morning he would halve the debt!

gwelf on December 8, 2009 at 2:37 PM

It’s the deficit he promised to halve, and it’s another Expired Campaign Promise (© Jim Geraghty).

The worse news is, while the current value of the Social Security “Trust Fund” is part of the overall debt number, it is not part of the yearly deficit.

steveegg on December 8, 2009 at 3:39 PM

Clearly, we need a massive tax increase, socialized medicine, and jack booted thugs monitoring our energy use to resolve all of our current problems.

Vashta.Nerada on December 8, 2009 at 3:41 PM

This is another fine example of how wonderful government programs are. These programs always deliver and never go insolvent. /s

America’s credit cards are maxed out. When the debt gets called, the only options will be to file bankruptcy, hand over the the keys to the debt holders, or seize even more of the individual’s income.

Say goodbye to the standard of living that we enjoy. We are doomed.

rukiddingme on December 8, 2009 at 3:34 PM

There is door #4 – print money. Of course, it will lead to the same loss of living standards as the other three.

steveegg on December 8, 2009 at 3:42 PM

What do you think people who are 62 and have lost their jobs are doing? They are applying to get SS so they have some money to buy food and whatever other necessities they will be able to afford on a SS check. DOUBLE WHAMMY! They are no longer paying into SS and instead are drawing from it.

TruthToBeTold on December 8, 2009 at 3:44 PM

There is door #4 – print money. Of course, it will lead to the same loss of living standards as the other three.

steveegg on December 8, 2009 at 3:42 PM

Forgot that one, you are correct. That option will probably be the one that is implemented since no one will pay attention until it is too late.

rukiddingme on December 8, 2009 at 3:47 PM

Can we all agree to stop using “grim milestone”?

Chuck Schick on December 8, 2009 at 3:47 PM

Don’t worry zero will get it from his stash and all will be well. He’ll spend his money since the people won’t. zero will save the day since the recession is over.

Brat4life on December 8, 2009 at 3:48 PM

***
I love the old MARRIED WITH CHILDREN episode where poor Al Bundy is sleeping on the couch. His weird red haired wife is teaching their teenage daughter and her friends how to get Al’s wallet out of his pocket without waking him up. They all are going to the mall to spend up money Al doesn’t have.
***
The daughter says, “Mom–this card is almost maxxed out! What are we going to do?”. Mom says, “No problem–we just open some new accounts before we leave for the mall!”.
***
Ditto for the Social “Security”, Medicare, Medicaide, Prescription Drug Benefits, and S-Chip Ponzi Schemes. Just open up another account–let’s call this one OBAMACARE. Spend now and pay later–wayyyy later.
***
Comrade Obama (PBUH) and the democRATS must have been watching Married With Children also–they have it down perfect.
***
John Bibb
***

rocketman on December 8, 2009 at 4:01 PM

I’m scheduled to begin recieving my Reserve Military retirement checks when I hit 60. That’s eight years from now. I wonder how THAT fund’s doing.

Big John on December 8, 2009 at 4:08 PM

I’m scheduled to begin recieving my Reserve Military retirement checks when I hit 60. That’s eight years from now. I wonder how THAT fund’s doing.

Big John on December 8, 2009 at 4:08 PM

If you have to ask, you won’t be able to stand the answer!

belad on December 8, 2009 at 4:38 PM

That was a fine, inventive choice of a graphic.

Kralizec on December 8, 2009 at 4:46 PM

Fantastic! the sooner it goes broke the better! Welfare for old folks is still just welfare. Remember if senior citizens were a company you would not invest the trillions in them that they currently receive. Its what the business world calls throwing good money after bad. Ditto for Medicare.

snoopicus on December 8, 2009 at 4:48 PM

Keynes won the Nobel prize in economics for claiming the gov’t should spend MORE money to get out of debt? Biden claimed we MUST spend more to get out of debt.

At $245,000 for each stimulus job, I’ll take the tax cut way to stimulate the economy, record revenues every time it was implemented.

Will these fools learn from history or simply rewright the history books? Page 103 – blame Bush, page 155 – blame Bush, page 191 – blame Bush.

Vote them out in 2010.

dthorny on December 8, 2009 at 4:52 PM

Wasn’t it about 36 years ago that the Americans first began killing their future payroll taxpayers? I have a message from the dead. They say, “Go to he11 and gnaw on the unintended consequences.”

Kralizec on December 8, 2009 at 4:55 PM

Fantastic! the sooner it goes broke the better!

snoopicus on December 8, 2009 at 4:48 PM

Thank God they put OUR money in a lockbox for us/sarc

Remember, Bush tried to privatize a portion of YOUR SS, he was destroyed by the libs, even though it has worked well in Galveston, Texas:

Workers making $17,000 a year are expected to receive about 50 percent more per month on our alternative plan than on Social Security – $1,036 instead of $683. [See the Figure.]
Workers making $26,000 a year will make almost double Social Security’s return – $1,500 instead of $853.
Workers making $51,000 a year will get $3,103 instead of $1,368.
Workers making $75,000 or more will nearly triple Social Security – $4,540 instead of $1,645.
Galveston County’s survivorship benefits pay four times a worker’s annual salary – a minimum of $75,000 to a maximum $215,000 – versus Social Security, which forces widows to wait until age 60 to qualify for benefits, or provides 75 percent of a worker’s salary for school-age children.

Sigh.

dthorny on December 8, 2009 at 4:57 PM

Speaking of red ink: In Recognition of Unprecedented Debt Handed to Nation’s Youth, Nickelodeon Replaces Trademark Green Slime with Red Ink http://optoons.blogspot.com/2009/10/in-recognition-of-unprecedented-debt.html

Mervis Winter on December 8, 2009 at 5:00 PM

Kralizec on December 8, 2009 at 4:55 PM

Worst thing about the whole mess is that we have no ability to predict the future of the individuals, unless there’s an honest-to-goodness prophet floating around.

How many Einsteins and Goddards and Curies have we offed? Even though, statistically speaking, highly gifted individuals are like a lottery win…we’ve thrown away a heck of a lot of ‘tickets’. Who knows how many ‘winning numbers’ were on the material we so callously discarded?

Dark-Star on December 8, 2009 at 5:03 PM

How to fix this? All together now- T-A-X-E-S!

NTWR on December 8, 2009 at 5:04 PM

Simple solution is for the age of benefits reception is to be moved upwardly to age 75. Combine this with the refusal of healthcare benefits to the older generations and you have the perfect solution. The original average of recipient at the time of the SSI bill was 65 and the recipients lived an average of two years after that which means they, FDR and company, were counting on the death of those folks from the get go. Just another legalized pyramid scheme.

larvcom on December 8, 2009 at 5:23 PM

Now list how much to simpleton lying stealing congress people will draw and compare, now that should raise some eyebrows.

bluegrass on December 8, 2009 at 6:45 PM

This is the best explaination I have seen of how the numbers are fudged, and the necessary debt ceiling increase to keep SS afloat:

http://www.lewrockwell.com/north/north790.html

The ‘lockbox’ is full of off budget IOU’s.

numbeddown on December 8, 2009 at 7:03 PM

And we want to let these people manage our health care? WTF??????

TrickyDick on December 9, 2009 at 1:32 PM

Hmmm. I worked for 40 years, had to go on SSDI cause I developed cancer and the meds I HAVE to take to control the cancer won’t allow me to work.
But durng those 40 years, I paid an ENORMOUS sum of money into Social Security – 12% of my GROSS income, iirc. And I want it back.
Every damn penny of it – but I’m feeling generous today, so I’ll forgo the interest on it.

realwest on December 9, 2009 at 2:01 PM