Social Security’s Implosion Continues
Crumbling quickly, thanks to the Obama economy.
May 15, 2012 - 12:17 am
An indicator of just how seriously the federal government’s financial situation has deteriorated (combined of course with the establishment press’s clear desire to emphasize “news” which might assist Dear Leader’s reelection effort) is that the dismal 2012 report released by the Social Security system’s trustees on April 23 received little attention. Viewed through that perverse prism, cash deficits which “will average about $66 billion between 2012 and 2018 before rising steeply,” even before considering the $110 billion or so taken from “general (non-existent) revenues” during 2011 and 2012 to make up for the payroll tax cut, pale in comparison to the importance of higher priorities — like working up a 5,400-word report riddled with errors and distortions on what Mitt Romney was doing when he was a teenager.
The sad, under-reported truth is that three years into an alleged “recovery,” the long-term outlook for Social Security continues to crumble at an accelerating rate.
It’s a crackup which was decades in the making. That’s because the government has scandalously used Social Security’s annual surpluses to fund the rest of its operations since President Lyndon Johnson began “including Social Security and all other trust funds in a ‘unified budget’” in the 1960s. Social Security’s so-called “Trust Funds” consist of nothing more than stacks of IOUs from the rest of a dangerously indebted government.
During fiscal 2007, a mere five years ago, the system ran a cash surplus, as tax collections exceeded benefits paid and administrative costs by $186 billion. With the wave of baby boomer retirements looming on the horizon, everyone knew that these large annual surpluses couldn’t and wouldn’t last. In their 2008 report covering calendar 2007, the trustees projected that the system would begin paying out more in benefits than it collected in taxes in 2017; at that point, the rest of the government would have to start making up the difference.
Instead, annual surpluses virtually vanished just two years later, thanks to the onset of the POR (Pelosi-Obama-Reid) economy in roughly June of 2008. The Democratic Party’s permissive home lending-driven, securities fraud-enabled recession, followed by the Obama administration’s failure to choose policies which would have hastened a genuine recovery and acceptably grown the economy, brought things to a head with Social Security that much sooner. In the 2010 Trustees Report on 2009 results, tax collections were only $3 billion greater than benefits paid. 2010 went into the red by $49 billion, while 2011, after taking the payroll tax-cut reimbursements into account, had a deficit of $45 billion. After the 2012-2018 shorfalls cited earlier, annual cash deficits are projected to head quickly into the land of triple digits. If the economy doesn’t start generating significant growth and job creation, they might even arrive as quickly as the first cash deficits.