Social Security cash flow deficits are projected to begin in 2016

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From: The Concord Coalition

WASHINGTON BUDGET REPORT: May 18, 2009

Trustees Report Projects Social Security Deficit in 2016

Last week, the Trustees of the Social Security Trust Funds (Old-Age, Survivors, and Disability) released their annual report. In a nutshell, following is the status of the trust funds, based on the Trustees' findings:

• Social Security is a pay-as-you-go program where incoming payroll tax revenue revenues (6.2% each from employers and employees) pay for benefits disbursed to retirees and disabled Americans.
• 
  Cash flow deficits are projected to begin in 2016, as opposed to last year's estimate of 2017.
• 
  Cash deficits will continue and worsen as the baby-boom generation retires.
• 
  The assertion that "social security surpluses" will keep the program solvent until 2037 is misleading, because the surpluses do not actually exist except on paper. The surpluses consist of IOU's from the Treasury Department to the Social Security Trust Funds (Treasury Bonds) and can be redeemed only if taxes are raised, spending is cut, or the Treasury borrows the money.
  
• Dedicated tax income (including taxation of benefits) projected for 2016: $986 billion. Benefit payments projected for 2016: $1,005 billion

Who are the Trustees? Secretary of the Treasury Geithner; Secretary of Labor Solis; Secretary of HHS Sebelius; and Commissioner of Social Security Astrue. The two public trustee positions are vacant.

2009 Social Security Trustees Report


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