A year ago, I wrote:
Think Social Security will be solvent until 2041? Think again. The next president will face rapidly growing problems by the end of his or her first term.
At the time, the concern was that the substantial Social Security surpluses we have experienced during the past 22 years would begin to shrink.
An updated version of a Congressional Budget Office chart I presented last year shows that the shrink has indeed begun (information is at the “data” link at this CBO page):
Social Security’s surplus for the year ended September 30, 2008, fell to $180.2 billion, reducing its subsidy to the rest of the government.
What? That’s right; I said “subsidy to the rest of the government.”
Social Security’s surpluses have been raked off by Uncle Sam and have subsidized the rest of the government since 1968, when President Johnson began “including Social Security and all other trust funds in a ‘unified budget.’”
At that point, as I wrote last year, “Social Security’s Trust Fund, instead of being a separate, untouchable stash of cash and investments (i.e., instead of being run like a normal pension plan), thus became money that the rest of the government could raid.”
And raid it they have, as you can see above. Since 1986, Social Security surpluses have subsidized the rest of the government to the tune of over $2.3 trillion, enabling reported deficits to be lower than they really have been. Social Security’s so-called “Trust Fund” consists of a stack of IOUs from Uncle Sam, who is now over $11 trillion in debt.
A year ago, the annual Social Security surpluses were expected to shrink to zero by 2017. That’s because, starting last year, the annual demographic wave of millions of baby boomers reaching the system’s minimum age of 62 for collecting began to hit. This wave will continue for the next two decades.