Last Updated:September 1 @ 10:22 pm

Social Security fund to run deficits this year, will be empty by 2037

By Stephen Ohlemacher

WASHINGTON (AP) — Sick and getting sicker, Social Security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037, congressional budget experts said Wednesday in bleaker-than-previous estimates.

The massive retirement program has been suffering from the effects of the struggling economy for several years. It first went into deficit last year but had been projected to post surpluses for a few more years before permanently slipping into the red in 2016

This year alone, Social Security will pay out $45 billion more in retirement, disability and survivors' benefits than it collects in payroll taxes, the nonpartisan Congressional Budget Office said. That figure nearly triples — to $130 billion — when the new one-year cut in payroll taxes is included.

Congress has promised to replenish any lost revenue from the tax cut, but that's hardly good news, either, adding to the federal budget deficit. In another sobering estimate, the congressional office said government red ink this year will increase to $1.5 trillion, the most in U.S. history.

More than 54 million Americans receive Social Security benefits, averaging $1,076 per month.

The outlook for the program has grown more sour as the nation has struggled to recover from the worst economic crisis since Social Security was enacted, during the Great Depression. In the short term, Social Security is suffering from the weak economy that has payroll taxes lagging and applications for benefits rising. In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits.

The projected deficits add a sense of urgency to efforts to improve Social Security's finances. For much of the past 30 years, the program has run big surpluses, which the government has borrowed to spend on other programs. Now that Social Security is running deficits, the federal government will have to find money elsewhere to help pay for benefits.

"So long as Social Security was running surpluses, policymakers could put off the need to fix the program," said Andrew Biggs, a former deputy commissioner at the Social Security Administration who is now a resident scholar at the American Enterprise Institute. "Now that the system is running deficits, it simply becomes clear that we need to act on Social Security reform."

President Barack Obama said in his State of the Union address Tuesday night that he wanted "a bipartisan solution to strengthen Social Security for future generations."

The president however has not embraced recommendations from a debt commission he appointed last year, including one that would gradually increase the full retirement age, from 67 to 69, over the next 65 years.

But Obama did lay down some markers for making Social Security closer to solvent.

"We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities, without slashing benefits for future generations and without subjecting Americans' guaranteed retirement income to the whims of the stock market," Obama said.

The program has been supported by a 6.2 percent payroll tax, paid by both workers and employers. In December, Congress passed a one-year tax cut for workers, to 4.2 percent. The lost revenue is to be repaid to Social Security from general revenue funds, meaning it will add to the growing national debt.

Social Security has built up a $2.5 trillion surplus since the retirement program was last overhauled in the 1980s. Benefits will be safe until that money runs out. That is projected to happen in 2037 — unless Congress acts in the meantime. At that point, Social Security would collect enough in payroll taxes to pay out about 78 percent of benefits, according to the Social Security Administration.

The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment, with interest.

"Social Security taxes are not going to pay for the spending, so it's got to come from somewhere else," said Eugene Steuerle, a former Treasury official who is now a fellow at the Urban Institute. "We can go through long arguments about whether its owed money by the trust funds or not, but that doesn't alleviate the simple fact that it's got to come from somewhere."

Social Security supporters are adamant that the program will be repaid, just as the U.S. government repays others who invest in U.S. Treasury bonds.

"Its' an IOU that is backed by Treasury bonds and the faith and credit of the United States government," said Sen. Bernie Sanders, I-Vt. "It is the same faith and credit that enables us to borrow from rich people and from China and from other countries. As you well know, in the history of this country, the United States has never defaulted on one penny owed to a creditor."

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10 Comments

  1. VirgoVinceComment by VINCE
    January 27, 2011 @ 8:14 am

    “For much of the past 30 years, the program has run big surpluses, which the government has borrowed to spend on other programs.”
    “The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment, with interest.”

    That’s what you call, idiot libtard left pinheaded BS!  It wasn’t ‘borrowed!’  Let no one forget that it was the dummycraps that first ‘raped’ the SS account and never thought of repaying it!  WHEN and HOW?  WE’RE BROKE!
    Don’t hold you breath waiting for any of obozo’s promises, he only knows how to LIE and SPIN and BS!

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    • onewildmanComment by onewildman
      January 27, 2011 @ 9:01 am

      Vince they have not issued bonds, what they did was issue IOU’s. They have issued so many that they have a building just to house them. If I had the money taken from me over the last 38 years and kept it in the bank I would have over 1/4 of a million dollars in the bank for retirement. I will pay at least another  $60,000 in to SSI before I’m retirement age.
       
      IMPEACH OBAMA NOW!

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    • VirgoVinceComment by VINCE
      January 27, 2011 @ 1:44 pm

      Onewildman, thanks for your input, but one slight correction, pleae!
      I didn’t say anything about the bonds (IOUs) issued, that was a quote from the original article, above!  I just copied it!
      You’re not the only one cheated out of income savings, you have lots of company, but I know that doesn’t make up for anything to you!  I’m sorry for ALL of us that have been cheated! 
      Are you aware that illegals and refugees are making ‘almost’ double the national average of SS payments, none of which is their money, but yours and mine, all of which adds to the deficit in the SS fund?  THEY don’t deserve any rewards or benefits!
      I say, ARREST OBOZO NOW!

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    • onewildmanComment by onewildman
      January 27, 2011 @ 2:14 pm

      Vince not only am I aware of it. Thanks to Jimmy Carter everyone who immigrates to the US who is retirement age is eligible for Medicare and $800.00 a month from SSI. That is a crime against every tax paying American. The system isn’t going broke it’s being robbed just as sure as a criminal robs a bank.
       
      IMPEACH OBAMA NOW!

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  2. Ben_ColderComment by Ben_Colder
    January 27, 2011 @ 9:02 am

    People making our clothing and other things in foreign nations are not paying Social Security taxes. They are taking away American jobs that would pay taxes.

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  3. QohelethComment by Qoheleth
    January 27, 2011 @ 9:43 am

    Every time Social Security, Medicaid and Medicare are mentioned, they should be prefaced by “The entitlement” to be truthful.  For example: ‘The entitlement Social Security will be in a deficit as of 2011.”  Of course the truth is that these programs are simply Ponzi Schemes where the money has all been spent as soon as it comes in.  AARP and others lie to their constituents and make them think that their actual money is somewhere drawing interest and being released to them.  If it is their money, why are there numerous restrictions as how much other money they can earn while drawing social security?
    The fact is that these programs need to be stopped.  There needs to be a reduction period where ALL RULES about outside earning and assets are removed, and people can had their freedom back!  STOP SOCIALISM — SOCIAL SECURITY IS FDR SOCIALISM, nothing more, nothing less.

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    • QohelethComment by Qoheleth
      January 27, 2011 @ 9:44 am

      In the next to the last sentence, “had” should be “have.”

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    • USNpopsComment by USNpops
      January 27, 2011 @ 11:48 am

      Bush early in his presidency had a plan to change Social Security based some wnat on the plan in Chile. 
      There you pay into the fund,  you own the fund,  and the fund draws interest on your money.  Upon Retirement you have money there to cover you.  In addition beacuse you own it,  your heirs get it should you die.  This money is not able to be touched by the government for any reason.  And many are retiring with money enough to live the same lifestyle as when they worked .Congress did everything but laugh at thei scheme to take away their ability to spend our money. 

      And it is our money,  I paid into it for 65 years,  and feel that I deserve the monthly checks.  But here I have had to reduce greatly the lifestyle I lived prior to retirement.  And it’s getting worse every year due to the lack of COLA and increasing prices for everything we buy.  

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    • EdwardComment by Edward
      January 27, 2011 @ 12:03 pm

      USNpops has it right… paid into it until I retired and am STILL paying into it through having it taxed. The Congressional thieves who stole from the fund are the cause of all the shortfalls that are now a problem.
      Since there is not other alternative, I see a need to change the system but it needs to be done gradually. Similar to the change in full benefit years change made several yars back. Phase in a “personal” account plan that allows for SOME taxation of the youngest workers as a “cushion”, but apportion it out so as to have those in the middle doing about a 50-50 split in taxes and investments. A TOTAL ban on money paid out to immigrants (legal or otherwise) without factoring in what they contributed INTO the system must happen. Those late-comers who derive benefits all out of proportion to their contributions do NOT deserve the benefits they receive.

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  4. cookiesncoffeeComment by cookiesncoffee
    January 27, 2011 @ 1:03 pm

    If there are 54 million people on social security, then maybe they could give all 54 million of us one million dollars each with the stipulation that we no longer receive social security and medicare.  Now this would be for all seniors that have paid into the system.  That would free up a lot of money.  They should also stop raiding the social security trust fund and putting in iou’s.  I think they are afraid of privatizing social security because they would no longer control it.

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