Social Security Paying Out More Than it Receives says CBO

201003250852.jpg This year, the Social Security system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016 said the Congressional Budget Office. The Obama Administration said that while the Congressional projection would probably be borne out, the change would have no effect on benefits in 2010 and retirees would keep receiving their checks as usual.

According to the New York TImes, the problem is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.

Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances.

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“When the level of the trust fund gets to zero, you have to cut benefits,” Alan Greenspan, architect of the plan to rescue the Social Security program the last time it got into trouble, in the early 1980s, said on Wednesday.

That episode was more dire because the fund could have fallen to zero in a matter of months. But partly because of steps taken in those years, and partly because of many years of robust economic growth, the latest projections show the program will not exhaust its funds until about 2037.

Still, Mr. Greenspan, who later became chairman of the Federal Reserve Board, said: “I think very much the same issue exists today. Because of the size of the contraction in economic activity, unless we get an immediate and sharp recovery, the revenues of the trust fund will be tracking lower for a number of years.”

In addition, there is a great graphic from the Times showing the difference between last year’s CBO estimate and this year’s:

Social Security to See Payout Exceed Pay-In This Year

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  • JFK was the one Democratic President in the last 100 years who faced an extremely difficult economic situation and handled it in a truly pro business style. Truman was smart and stood out of the way and Clinton had a lot of luck doing the same.

    The President is so caught up in social issues he seems oblivious to the economy and the need to financially strengthen our entitlement programs by stimulating job growth in the private sector. Stimulating growth in government jobs does far less for the entitlement programs. Real economic issues have always been a problem for those who have never been responsible for meeting payroll.

    Unfortunately I believe the President is also blind to and ignorant of the plight of seniors applying for HECMs due to the overbearing actions of his OMB in forcing HUD to use such ridiculously low home appreciation rates in the HECM credit subsidy calculation. It is hard to believe his intent in taking office was to cause such harm.

  • One more reason why the folks at HUD need to stop ruining the HECM program!

    The seniors are getting squeezed every time they turn around, yet the Obama administration is spending trillions on a health care program that is doomed to fail.

    How about a little more concern over taking better care of “The Greatest Generation”?

  • JFK was the one Democratic President in the last 100 years who faced an extremely difficult economic situation and handled it in a truly pro business style. Truman was smart and stood out of the way and Clinton had a lot of luck doing the same.rnrnThe President is so caught up in social issues he seems oblivious to the economy and the need to financially strengthen our entitlement programs by stimulating job growth in the private sector. Stimulating growth in government jobs does far less for the entitlement programs. Real economic issues have always been a problem for those who have never been responsible for meeting payroll. rnrnUnfortunately I believe the President is also blind to and ignorant of the plight of seniors applying for HECMs due to the overbearing actions of his OMB in forcing HUD to use such ridiculously low home appreciation rates in the HECM credit subsidy calculation. It is hard to believe his intent in taking office was to cause such harm. rn

  • One more reason why the folks at HUD need to stop ruining the HECM program! rnrnThe seniors are getting squeezed every time they turn around, yet the Obama administration is spending trillions on a health care program that is doomed to fail.rnrnHow about a little more concern over taking better care of “The Greatest Generation”?

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