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  • Social Security Bailouts Begin in 2010

    Fiscal reform has become a hot topic in Washington as spending hits all-time highs and Congress and the President continue to push several new high-ticket items closer to law.  Lawmakers and concerned citizens alike are shifting focus to the looming fiscal crisis that will be caused by from entitlement spending on the Medicare, Medicaid, and Social Security programs.  But for Social Security, that red ink isn’t so far off in the future—in fact, it’s scheduled to arrive in 2010.

    In the Washington Post, business columnist Allan Sloan highlights a report from the Congressional Budge Office (CBO) which confirms that in 2010, Social Security outlays will exceed revenue for the first time in 25 years.  The CBO report shows that Social Security will earn $120 billion in interest on its trust fund, which would seem to cover its $92 billion surplus.  Not so.  As Sloan explains, the interest does not constitute funds with which to pay benefits.  It is nothing more than IOUs from the Treasury.

    The CBO report shows decreased deficits for 2011 and 2012, with Social Security breaking even thereafter.  But as The Heritage Foundation has warned, by 2016 Social Security will begin running permanent deficits.

    This latest twist on Social Security’s financial shortcomings is attributable to the recent economic downturn.  Revenues dwindled as Americans lost their jobs, reducing tax collections.  This effect is compounded by the greater number of Americans forced into early retirement and newly dependent on the Social Security program.

    Social Security benefits will not be reduced in response to the deficit.  Rather, taxpayers will make up the difference, via aid from the Treasury, in order to keep benefits checks from bouncing.  The early arrival of the need for a Social Security bailout should serve as a severe reminder to the Obama Administration that entitlement reform is needed now to ensure a sustainable economic future for the country.  And yet, the President’s recently published 2011 Budget does nothing to address this growing problem.  Spending on Social Security, Medicare, and Medicaid continue to eat up a major portion of federal funds with no serious reform efforts in sight.

    According to Heritage expert David C. John, there are ways in which Congress and the President could provide short-term solutions to fix Social Security.  These include reducing benefits, increasing retirement savings, and raising taxes.  The first two solutions are the most promising, but would not immediately produce reversals in spending as such changes would have to be phased in, since it would be infeasible to change benefit structure for current retirees or those close to retirement.  As for the last idea, politicians should steer clear of raising taxes to cover short-term Social Security deficits, as this merely delays more substantial change and is an insufficient long-term solution.

    As Sloan writes, “Until this year, Social Security was a problem for the future.  Now it’s a problem for the present.”  Hopefully the President gets the message and pursues the necessary measures to properly address this event.

    Posted in Economics [slideshow_deploy]

    33 Responses to Social Security Bailouts Begin in 2010

    1. Sharon, Irwin PA says:

      I worked for the Social Security Administration for 20 years. And I have come to believe that it is the worst thing that ever happened to America. Before we had SS, families took care of each other. You just knew you would take care of Grandma or Aunt Sally. Now, families do not take care of each other anymore. Grandma moves to Florida and the kids don't care about her, because they never see her.

      In addition, people have stopped saving for their own retirement, because they have come to believe the government will take care of them.

      The last time I checked, one out of every 10 persons in the US was getting a Social Security check. That is ridiculous!

      Social Security should be fazed out completely.

    2. gary harston,Moweaqu says:

      Im not yet old enough to draw social secruity but im retiered from my state job but i know that bwe have to do something very soon about these programs if they the politicions would do the right thing now to fix it we would all adjust to the changes but they are to afraid to stand up and do what they need to do

    3. John B. San Diego says:

      Kathryn, I have paid into SS since mid-sixties, and I want my money back, they robbed me and made promises they can’t keep.

      I’ve heard rumors of the US Gov spending our life savings on other programs, programs we didn't approve of and further more we were never informed our life savings was be spent before we retired. This does not pass the smell test for me.

      Here is a suggestion Kathryn if you have any pull or maybe some one would listen. I've often wondered if the Social Security Administration would have purchased a US Savings Bond from the begining of my employment with my name on it using the money I and my employers had paid in hundred dollar increments as my account went up.

      As those hundred dollar savings bonds matured; roll that money over and buy another one put it back in my account and wait for that one to mature.

      How much money would I have to retire on when I reached retirement age?

      Well I will tell you it's a "blank" of allot more than I think the treasury is going to give me.

      Maybe start doing that for today’s young workers, so as SS goes broke; it sees that future generations get more out of the treasury than me.

      President Andrew Jackson was right and we Americans have getting robbed for a long time. Treasury has a conflict of interest with implementing my plan; why should they pay me interest on my hard earned dollars for decades, when they can just simply rob me? They had better make this one right and quit studying mating habits of animals on other continents and building bridges to nowhere and out right robbing We Americans! We want our blank-it-blank money back.

    4. Bobbie Jay says:

      Everyone that has paid into social security should just crash the office to demand application for immediate action that all that was paid in, be paid back. Regardless of personal situation, the point is the money stolen, used for fraud and corruption. Government can do without, instead of, within their control and at no need, forcing us to.

    5. dick, houston, tx says:

      The problem can be alleviated by stricter enforcement of eligibility requirements.

      This would not be a permanent fix but would postpone the problem a few years.

      As the population ages there must be changes in the eligibility rules and an increase in the tax if we are to sustain the system. Addressing these issues now

      is key to a satisfactory resolution of the problem.

    6. Gary Blanchette, Wor says:

      Social Security is just a legal Ponsie Sceam. Bush tried to privatise a portion of it but Congress didn't want to touch it.

    7. Bill Witter, San Ant says:

      I have a real problem with your calling Social Security and Medicare "Entitlements".

      I have paid into Social Security through payroll deductions for 48 years. I have paid into Medicare for, I do not know how many years,

      I continue to pay $96.40 per month, or $1156.80 per year for Medicare.

      It is not my fault that our government has replaced the Social Security funds with IOU's so that thay could spend the money on Pork projects.

      This is just the first in a long line of days of reckoning brought on by our government's out of control spending.

      To coin an old phrase – You ain't seen nothi'n yet!

    8. Carol, AZ says:

      I will remind all of us that D.C. acknowledged that the system needed reforming.

      Suggestions were proposed by both Dems. and Rep for accountability an verification for fiscal accountability within.

      E-Vertify was voted on and passed four times supported by both party's..

      This administration, with Homeland Security, behind closed door sessions blocked the passage of this proven search engine utilize by all Federal Law enforcement agencies under the branches of Homeland Security.

      Is it too progessive to suggest " Don't ask , don't tell."

      or are we all just playing "Blind Man Bluff."

    9. Joe Bonasses says:

      Simple solution. CUT DEFENSE SPENDING. Why we are still spending 50% of tax revenue on defense twenty years after the end of the Cold War is beyond me. Or at the very least require the Pentagon to provide a full accounting of what they spend every year, something which hasn't occurred since the early nineties. Pretty low hanging fruit if you ask me…..

    10. lauraj400 says:

      I am disabled and can not work,my sister is in her 70s and can not work,if you get rid of SS what do you suggest we do?

    11. Ben C. Ann Arbor, MI says:

      SS, Medicare and Medicaid are unfunded to the tune of +/- 60 Trillion dollars. Total national debt somewhere are 100 Trillion dollars. In anyones book we are bankrupt. The reality is that checks WILL bounce and the people who created this mess will be long gone. The reality is that those who were able to stash away funds, legal or otherwise, will do ok, but those who think the "government" will be there for them are sadly mistaken. It is time to pay the piper and it is going to get real ugly very soon.

    12. Drew Page, IL says:

      Why do they call it "interest" if the Treasury Dept. doesn't actually pay it into the S.S. Trust Fund? What good is a Treasury Dept. IOU? Who do you think has to repay the "IOUs" left by all of the government robbers who have plundered the S.S. Trust Fund for years?

      Of course Social Security is broke, how could it not be? All the money we and our employers paid into this Trust Fund was supposed to have been kept in a "lock box", untouchable for any other purpose but to pay Social Security benefits to those who earned them.

      In all my years, I can never remember a time when the government said we are going to take so many billions out of Social Security to finance this war or that program. "We the people " were not given the opportunity to vote on such expenditures, we were not even told of the expenditures.

      I believe that the Government Accounting Office should publish a list of all money taken from the Social Security Trust Fund, when, by whom, for what purpose and how much was ever repaid. Our government owes us that.

      It's time this government starts being run like a business instead of a charity, where contributions are mandatory. Despite what Harry Reid thinks, taxes are mandatory, at least for those of us outside the Obama administration.

    13. Dave - Chelsea, MI says:

      Joe Bonasses – currently defense spending is about 5% of GDP —- During the Bush Administration, it was 3.5% of GDP……..oh yeah – it is a dangerous world and we need to defend our Nation — but right now I fear the "enemy within" (elected leadership) more than the outside world.

    14. Jack Rough Columbus, says:

      I would gladly give up any benefit from Social Security if the program were abolished. Then all of the revenue would disapear from the coffers of the politicians in D. C. This coupled with a percentage of tax free income invested for ones own retirement would return US to a stagering groth rate with inovation and liberty as before the entitlement economy began.

    15. Rich,Phila.Pa. says:

      I paid into the system,like every other American,our Government has been tapping Soc.Sec.since the Vietnam war.Social Security entitlements have gotten out of hand,which Washington allowed,both parties at fault.Giving Soc.Sec.to illegal immigrants along with benefits.Cutting our Defense budget is not the answer.We already experimented with cutting Defense after WW1,WW2,we were lucky & had the Manufacturing Capacity to win WW2,plus the patriotic man-power,we almost got our butts kicked in the Korean War because of Defense cuts,Our fearless leader is already cutting our defense budget,most of the New Defense Bill he just signed is going for Pork Projects.Obama halted the F22 program,our enemies are in favor of Obama,plus he is helping destroy our ecomony for his Socialist plans.

    16. Pingback: Bailout II: Electric Boogaloo - Social Security - My Les Paul Forums

    17. John B. San Diego says:

      Wow would not be good if government gave to you all the "Audacity of Hope"; as we observe the government only wants to rob the next generation to pay out “Partial Entitlements" for this generation.

      And this has been repeated recently throughout the generations maybe three.

      This type of governing "or lack thereof" is proof small federal government is inherently better government.

      So much money is wasted collecting dollars to turn around and pass them out to the same people they collected the dollars from.

      The United States is bankrupted for not having followed the CONSTITUTION!

    18. Lynn Bryant DeSpain says:

      Most number counters heard on the Media blame Medicare and Medicaid for the finacial failure of Social Security. For those of us that remember, it was during the Johnson Administration, that the Social Security Funds we opened up to Section eight and Welfare recipients. That is where the money went. For the past two decades, it really went fast because of Illegal Aliens being allowed to stay in this Nation and feed off our Social Programs. The first Bush, made them Citizens, hoping to stop the flow. Didn't work! Now they want to try it agin, and it won't work agin. That is a sign of insanity.

      Don't blame the old people, they paid already. Blame the bunny huggers and the tree huggers and all those who want Utopia, without having earned it.

    19. Randy Powell says:

      If the government tries to cut Social Security benefits for the Baby Boomers who have been paying into the system for the last 30 years and have yet to collect a single dime, the politicians had better pass very strict gun control and be ready to spend lots of extra money on the national gaurd, the civil unrest will be greater than that we saw during the race riots of 1960's.

    20. patty t. says:

      I am 50 years old now, and don't have a clue about the financial world, stock exchange, CDs, etc. But I am trying to learn. I do plan to have my house paid of in 5 years. The rest is unsure, because Social Security won't be there for me!

    21. rowley, port aransas says:

      Has congress ever paid back all the funds borrowed from SS since it's inception ?

    22. Disinterested Specta says:

      As for the two trillion or so in bonds being held by the Social Security Administration, I suppose that Congress will just declare them null and void. However, the Chinese communists do not have to worry about the Treasury bonds they hold. That totalitarian government will receive every dollar in principal and interest they have coming to them. We are only going to repudiate the bonds being held on behalf of the working man and woman of the United States of America. Of course, the collateral for those bonds is the same as that in a Merchant of Venice: a pound of flesh, which we will extract from the hide of every politician who votes for that repudiation. Allan Sloan no doubt fancies himself a hardheaded realist, but he is living in some kind of libertarian dream world if he thinks Congress and the President (any President!) will take that step.

    23. Dustin says:

      Why are we limited to who we can vote for (because of currency) to Republicans and Democrats. Do people really think that's what defines who a president or elective is by their alignment with those 2 parties? That is absurd! There were a lot of electives but they all dropped out mostly because of currency. Currency… He who controls the money controls the economy and our votes. Why is our system being manipulated like this? Why cant we vote for the other people? Who is controlling our elections? And who is manipulating our economy?

      Why are we not doing all we can to bring money and jobs back into our country? Why is it cheaper for businesses to move elsewhere and ship crap all the way back to America? How is that efficient in any likely way? Why is there no tariffs for shipping this crap from over seas so it doesn't kill our jobs?

      Who is in control of the American deficit and why are we in debt? Why has it been in such a bad state of affairs with out any solution for so long?

      If reducing taxes encourages the economy to spend more why did they not give those "billions of dollars for stimulus" to the American people for money to spend as part of the tax return?

      How much of everything we buy anyways is shifted over seas since most the products we buy are made over seas? Is that the real problem?

    24. Mary Moran says:

      To begin with if the US Government did not take money out of the Social Security payment there would be enough money to cover generations of US Citizens. I do not believe we should give money to people that break into our country. They are here illegally they should NOT BE REWARDED FOR BRAKING INTO THIS COUNTRY. THEY DO NOT PAY TAXES – they get free education, health care and demand an education in their language. And then they send their money back to their Mother country. This is all on the backs tax paying citizens. And they refuse to speak ENGLISH. I have no problem with people that enter our country legally. 90% for the citizens of this courntry came for some other place in this world at one time. However, Most Big business and small business hire illegal for cheape labor. They do not want to pay american workers. The owners of big business must put themselves first and their country second.

      Let face facts not every American has the brain power, or are physicially or mentality able to take care of themselves. Most familys are unable or uncapable for taking care of them. And in some cases the families disown the mentality ill because then can not deal with it. I also find the " so call christian" are the ones that do not want to help the misfortune. When one reads the Bible where does one find in the bible that god advises us not to help the physicial and mentality people. For those against helping these people I truly hope god stricks one your children or grandchilden so you can watch them walk in the shoes of the misfortune. And I do hope God had no merce on your soul. My last comment is that People that do not want to pay taxes which I fine unamerican. The country cannot run unless we pay taxes.

    25. Jackson, Dallas says:

      If one examines the root cause of the SS debacle it all began when the nutty idea was drafted as part of the new deal to force citizens (apparently too stupid to create their own retirement nestegg) to participate in a mandatory scheme, not unlike a pyramid scam which depends on people continuing to participate.

      In the early days it must have seemed truly like a good deal so long as the ratio of donors to recipients remained high. But today the pyramid is flipped upside down and on the brink of collapsing upon us.

      Of course all of us that were forced to entrust the government with our retirement funds want that money back as promised, but the reality is some will never see it.

    26. Pingback: Unsurprisingly, Social Security Surplus Withers | The Foundry: Conservative Policy News.

    27. Keith, Tampa says:

      And these clowns want to have a National Health Care Plan,. which appeared as another mandatory taking. These thefts must stop. Be heard at the ballot box in November 2010, it is the only time our Congress seem to listen.

    28. SHELIA DURHAM NC says:

      I WANT TO KNOW IS THERE BE A ONE TIME CHECK IN 2010 CAUSE OBAMS SAY IT BE A ONE TIME CHECK IN 2010 I STILL DONT SEE IT IS SOCOAL SECURITY GET ONE THIS YEAR PLEASE WRITE BACK AND LET ME KNOW SO I LOOK FORWARD TO HEAR FROM YOU REAL SOON.

    29. VIVIAN, NEW YORK says:

      A few years back some one from social security stated that if all employers will contribute another 2% and each employee also contribute 2% this will help save social security. I thought that would be a good idea. It's better then eliminating it altogether.My husband and i have put into social security for many years and will retire in eight years. We pray that it will still be here. Were getting the impression that this government doesn't want to do anything about social security. If the government does nothing and it colapse then i'm sure this government will have a revolution on there hands.

    30. Pingback: WaPo Ignores Social Security’s Deficits | National Review Institute Blog

    31. Pingback: Social Security in the Red | Pratts Pub

    32. HJ Jensen, CA says:

      Looks like the Republicans are going to get their way about going back to pre-New Deal situations. First they run the American economy into the ground and then blame the social safety net for it!

    33. susan al says:

      sharon irwin you don,t understand people need social security to live on i put into the system also illegal immigrate should not get it but you and other gave it to them they get more then i do i know

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