02 Apr 2009

Social Security Is Already Broke

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Tim Swanson sends this alarming article. While (almost) nobody was looking, the Social Security “surplus” disappeared in February. You know, the event that wasn’t supposed to happen for another ten years or so?

And also, don’t reassure yourself with the existence of the “trust fund” to keep the Social Security deficit from affecting the rest of the government’s finances. Up until now, every year Social Security took in more (from payroll withholding etc.) than it paid out in benefits. So in theory, that means there should be a huge stockpile of savings that the SS administrators can draw down, now that they have to pay out more in benefits each month than they are taking in from workers’ contributions.

Ah, but there’s the rub. Do you know that the Social Security trust fund consists of government IOUs? Yep. So as a taxpayer, don’t worry: The feds won’t need to cut spending or raise taxes because Social Security is now running deficits–they’ve got a bunch of claims on the federal government to get out of their hole. Phew!

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