Green Room

CBO – Social Security in even worse shape than predicted

posted at 9:00 pm on March 13, 2012 by

Allahpundit already hit on the Congressional Budget Office takedown of PlaceboCare as part of its March review of the budget. Allow me to pile on with the bad news on Social Security. The CBO took a look at the projected operations of the “trust funds” over the next 10 fiscal years:

A couple of things jumped out at me:

  • The primary (i.e. non-interest) deficits of each half of Social Security will only continue to grow from this past fiscal year, even without counting the effects of the mostly-unfunded payroll tax holiday.
  • The Disability Insurance part of Social Security will no longer be able to pay out the entirety of its scheduled benefits before the end of the next Presidential term.

Assuming the DI benefits continue to somehow be paid out after the beginning of 2016, the federal government will need to come up with $1.22 billion trillion beyond the payroll tax and taxes on Social Security benefits between this past October and September 2022 to meet the obligations.

Why it’s worse than predicted

Back in 2011, the Social Security Trustees predicted that the OASI portion would have a small primary surplus between calendar years 2012 and 2015, and that the DI portion would not be exhausted until 2018. While the Trustees deal with only calendar years, as part of a re-estimation of an earlier Trustees’ report (specifically, 2009, the last one before the Trustees began to claim that PlaceboCare would strengthen Social Security), I was able to rough out a month-by-month estimation of the Trustees’ reports, which allows for a (more-or-less) direct comparison between that and the CBO.

I kept on updating and adjusting the 2009 Trustees’ Report for what has happened through the Obama administration thus far (through January with numbers from the SSA and February with estimates from the Monthly Treasury Statement), and it has proven to be a leading indicator of the downfall of Social Security. Little did I know that even I would be trumped, at least short-term, by the CBO.

I would be remiss if I didn’t note that the last quarter of 2011, or if you prefer, the first quarter of FY2012, came in better than the close of the fiscal year would suggest. The calendar-year 2011 primary deficits were $34 billion for the DI “Trust Fund” and $11 billion for the OASI “Trust Fund”. Indeed, January saw the 12-month OASI primary deficit drop to just under $10 billion ($9.8 billion). However, February rather unexpectedly ended that trend, as the preliminary 12-month OASI primary deficit rose to $10.4 billion.

Revisions/extensions - Corrected a typo found by Zumkopf

Recently in the Green Room:

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Hey, stop it right there. Every retarded “FISCAL CONSERVATIVE” on this webpage says you cannot take any of their money away from them. That means, yup, you guessed it, that other people’s children are going to be further enslaved, be forced to put off their retirements longer, have more money of every dollar earned confiscated to be handed off to people who perpetually have worsened their future every step along the way. The people the generation after the babyboomer’s will be forced to pay longer, for more people, at higher percentages of the median income, along with more medicare spending. The babyboomers, the generation that brought back slavery to the United States of America.

astonerii on March 14, 2012 at 12:50 AM

The sad news is even the “reformers” are letting the Boomers off the hook for their bad decisions (both political and financial).

Steve Eggleston on March 14, 2012 at 1:11 AM

We need to reframe the abortion narrative by linking it to a new means-testing for social security: you only get a government check if you have gainfully-employed children.

AesopFan on March 14, 2012 at 3:35 AM

not expecting it to be there when I’m eligible…i’ll be 44 in april

the under 50 crowd need to wake up imho…

cmsinaz on March 14, 2012 at 7:41 AM

not expecting it to be there when I’m eligible…i’ll be 44 in april

the under 50 crowd need to wake up imho…

cmsinaz on March 14, 2012 at 7:41 AM

The over-50 crowd shouldn’t expect it there either. My analysis says that, under the “extended 2009″ intermediate scenario, the OASI “Trust Fund” goes belly-up in 2031, and to make it there, we’ll need to cough up $4.96 trillion (in nominal dollars). If one is really pessimistic, the high-cost “extended 2009″ scenario says OASI goes belly-up in 2027, and it will take $4.36 trillion to get there.

For those who can’t do the date-based math, that’s between 15 years and 19 years.

Steve Eggleston on March 14, 2012 at 8:12 AM

Steve Eggleston on March 14, 2012 at 8:12 AM

cripe…

let’s kick the can down the road some more shall we?

*shaking the head*

cmsinaz on March 14, 2012 at 8:14 AM

I’ll be 50 in a couple of months and I’ve already come to the realization that there will be nothing left when I eventually retire.

bsinc1962 on March 14, 2012 at 8:29 AM

I remember posting once that I would be far better off taking what I pay into SS, burying it in a can in the back yard. I was scorned, mocked, and then reassured that my retirement SS would “pay off” in the first eight years of retirement. I also pointed out that I am 48 years of age, and that the solvency of SS was in serious doubt.

…funny how things come back.

Turtle317 on March 14, 2012 at 9:08 AM

Benefits need to be cut across the board by 5% right now.

Mr. Bingley on March 14, 2012 at 9:22 AM

Turtle317 on March 14, 2012 at 9:08 AM

There was a study I remember reading in the late 90s that said the same thing. Stuffing your SS monies in a mattress would have netted a better return than the -3% SS was doing from the 70s to the 90s.

Heres the saddest part, the old folks in this country are being setup. PlaceboCare is designed to kill them off so they won’t affect these charts anymore. Its one of its many design features of ObamaCare.

Another way to help save SSDI is to stop paying for recipients kids to get orthadonture(braces).

orbitalair on March 14, 2012 at 9:27 AM

A great article Steve. I find no joy in looking at it but thank you nonetheless for the truth. I’ve discussed (argued, I’ll say it) over and over with “blue” friends that social issues are pointless if our debt isn’t addressed. Whenever they bring up the “we had a surplus in the 90s” I point out it was achieved on the backs of the Social Security payments.

I’m a late boomer (55) and my continuing disgust with my generation is the amount of debt we are going to leave our children. It may mean the end of our sovereignty as a nation and a dependence on other countries I find distasteful as an American.

itsspideyman on March 14, 2012 at 9:44 AM

We need to reframe the abortion narrative by linking it to a new means-testing for social security: you only get a government check if you have gainfully-employed children.

AesopFan on March 14, 2012 at 3:35 AM

But that is the rub. If you got children paying in to it, then you do not need the government. I said the same thing about a month ago or so. Social Security makes abortion a force multiplier in people having access to lots of money. No money spent on children, and lots of money in old age paid for by the children you never had. It is a perverted ideal, one that needs to go the way of the dodo bird.

astonerii on March 14, 2012 at 10:25 AM

I remember posting once that I would be far better off taking what I pay into SS, burying it in a can in the back yard. I was scorned, mocked, and then reassured that my retirement SS would “pay off” in the first eight years of retirement. I also pointed out that I am 48 years of age, and that the solvency of SS was in serious doubt.

…funny how things come back.

Turtle317 on March 14, 2012 at 9:08 AM

It had better not have been anytime since March 2010, when Ed first started his focus on SocSecurity before handing it off to me.

Steve Eggleston on March 14, 2012 at 11:05 AM

In paragraph 4, you mean $1.22 TRILLION, not $1.22 Billion. The days of Senator Dirksen, when a billion dollars was a lot of money, are long gone.

Zumkopf on March 14, 2012 at 11:12 AM

There have already been calls to raise taxes on SS by lifting the max that income earners put in (currently it’s 6.2% of $106k/yr max). Couple that with calls to means test benefits and families like mine get screwed coming & going. This is why I supported the 2% cut in payroll taxes – try to starve this behemoth sooner.

mdenis39 on March 14, 2012 at 11:29 AM

In paragraph 4, you mean $1.22 TRILLION, not $1.22 Billion. The days of Senator Dirksen, when a billion dollars was a lot of money, are long gone.

Zumkopf on March 14, 2012 at 11:12 AM

D’OH! I hate it when I have a typo.

Steve Eggleston on March 14, 2012 at 11:49 AM

There have already been calls to raise taxes on SS by lifting the max that income earners put in (currently it’s 6.2% of $106k/yr max). Couple that with calls to means test benefits and families like mine get screwed coming & going. This is why I supported the 2% cut in payroll taxes – try to starve this behemoth sooner.

mdenis39 on March 14, 2012 at 11:29 AM

That would have worked, at least after a fashion, had the 22 months of the 2-year “holiday” not (over-)financed by new home buyers/refinancers been absorbed by the “trust funds” instead of the general fund. I didn’t quite finish working through that scenario before the passage of the last 10 months of “holiday” (so I’m working off of memory instead of a spreadsheet), but had SocSec taken the hit on the reduced payroll taxes, it would have cut each fund’s “solvency” by about 6 months. The surprising part was that letting SocSec taking the hit would have resulted in a lower overall cost (higher cost on the DI side, lower on the OASI side) than shoveling the shortfall in from the general fund.

Steve Eggleston on March 14, 2012 at 12:01 PM

not expecting it to be there when I’m eligible…i’ll be 44 in april

the under 50 crowd need to wake up imho…

cmsinaz on March 14, 2012 at 7:41 AM

agreed, RTKBA

burserker on March 14, 2012 at 3:24 PM