Annually for well over a decade, the Social Security system’s trustees have been telling the public in polite words that a) its “trust funds” (old age and disability) represent an accounting fiction, and b) that the time when yearly benefits paid would exceed tax collections is not all that far away.
In a report (large PDF) originating from its Office of Management and Budget (OMB) in 2000, at Page 338, the Clinton White House also acknowledged those verities. Specifically, as the Washington Post’s Charles Krauthammer noted a few weeks ago, OMB analysts wrote:
These balances are available to finance future benefit payments and other trust fund expenditures — but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits.
For most of the decade which followed, the trustees told us that the Social Security system would begin running cash deficits in the mid- to late-2010s. Then, in the late spring of 2008, along came what I have since been calling the POR (Pelosi-Obama-Reid) economy. The four-quarter recession as normal people define it which Nancy Pelosi, Barack Obama, Harry Reid, and their party caused, followed by the awful policy choices they made once they gained full control over the executive and legislative branches of government, have led to a “recovery” so anemic that, in the words of Mort Zuckerman, the economy “is neither certifiably dead nor robustly alive.”
That pathetic “recovery,” accompanied by heavy doses of administration-induced economic uncertainty, has caused unemployment to remain historically high. The 21-month string of seasonally adjusted unemployment rates of 9.0% or higher which finally ended in February is the longest such streak in the 62 years such records have been kept. The government’s Household Survey used to determine the unemployment rate tells us that only 875,000 more Americans were working in February 2011 compared to a year earlier. The Establishment Survey used to report jobs added or lost shows about 1.25 million jobs added; but its figures have been retroactively adjusted downward by hundreds of thousands of jobs in each of the past two years (378,000 in February 2011; 902,000 a year earlier).
The payroll tax receipts on which Social Security depends have plummeted, and remain depressed. Such collections, which amounted to $193.9 billion during the fourth quarter of 2008, came in 6.9% short of that mark at only $180.5 billion in the fourth quarter of 2010, six quarters after the recession ended.