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Social Security’s Unexpected Deficits Show Urgent Need for Reform

September 29th, 2009 . by TexasFred

Social Security’s Unexpected Deficits Show Urgent Need for Reform

Starting this year, Social Security will spend more in benefits than it will receive from its payroll taxes. This is somewhat unexpected as just last year, the 2009 cash surplus was predicted to be about $80 billion. Even in May of this year, the program’s actuaries predicted a roughly $19 billion surplus. However, they failed to allow for the full effects of the recession, and the soaring unemployment both reduced tax collections and increased the number of workers who were forced to take early retirement.

This is very bad news for taxpayers, but worse is yet to follow. The 2009 deficit of about $10 billion will be followed by a 2010 deficit of about $9 billion. If there is a strong recovery–which is questionable at best–the program could briefly return to surpluses. But by 2016, deficits will return and continue permanently. A far more likely scenario is that Social Security will run deficits from this point on.

The Reality of the Trust Fund

These deficits do not mean that benefits will be cut, but they do increase the burden on taxpayers to pay them. On top of the $1 trillion-plus deficit predicted for this year to pay for the Obama Administration’s programs, taxpayers will have to find still more money to pay Social Security’s deficits. It is true that a trust fund exists that has been funded by $2.4 trillion of Social Security surpluses since 1983, but there is no real money in that trust fund.

As the Office of Management and Budget said in 2000, “These balances are available to finance future benefit payments … only in a bookkeeping sense. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits, or other expenditures.”

Congress has already spent every penny of that money, and all that is left are IOUs that must be repaid by the same taxpayers who paid the extra taxes in the first place. Taxpayers, not the trust fund, will end up covering Social Security’s deficits.

Full Story Here:
Social Security’s Unexpected Deficits Show Urgent Need for Reform

Many of my readers are retired folks. Some are retired because they have spent many years in the military, with various law enforcement agencies, some have retired from the private sector and some are retired due to health issues, disability.

I have many friend that fall into ALL of those categories.

I know some that are twice retired, they were military reserve and served their time there and went to work every day in a civilian capacity as well. Double retirement! Wow, how secure can you get? Right? So, answer this question. And you can just answer it in your head, or you can opine in comments, in any case, answer it for yourself, and be 100% honest in your answer.

How secure is YOUR retirement?

If you’re retired, civilian (private sector), military, police or any type of government employee, disability, ANY type of retirement, how safe is your retirement? And just what will you do if, by some strange quirk of fate, the government ADMITS that it’s broke and we’re operating on worthless paper?

Most of us have worked for years to earn our retirement. Some have investments to tide them over, some don’t. I know a lot of military and police retirees that had to go to work, simply because their retirement wasn’t enough to sustain a decent lifestyle. They needed to, and wanted to provide their families with MORE, and give them a better standard of living. What are these folks going to do if their retirement funds fail?

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