Social Security's Surplus Disappearing Fast in Downturn
Well, no need to worry about 2017 anymore. Thanks to the worst economic downturn since the 1930s, the moment of reckoning is already almost here: according to both the budget proposed by the White House in February and projections issued by the Congressional Budget Office (CBO) in March, Social Security benefits ($659 billion, according to the CBO) will exceed payroll taxes ($653 billion) in fiscal 2009 for the first time since 1984. Payroll-tax receipts generally hold up much better in recessions than do income taxes, but job losses have been so severe that the CBO expects them to decline slightly from 2008, while benefits rise almost 9% because of cost-of-living adjustments and the beginnings of the baby-boomer retirement wave. (See five reasons for economic optimism.)
If you count the $17 billion in income taxes expected to be paid on Social Security benefits, the system will still manage to provide a slight surplus for federal coffers in fiscal 2009. But from 2010 through 2012, there are small projected deficits, and after heading back into the black from 2013 to 2015, the program will then become a growing drain on federal finances, projects the CBO.
Back in 1983, when Social Security last faced deficits, Congress approved a set of Social Security reforms that included a graduated hike in the payroll tax and an increase in the retirement age. Thanks to those changes, payroll-tax receipts surpassed benefits in 1985, and the system has been operating at a surplus ever since.
HNN Hot Topics: Social Security
comments powered by Disqus
- Joan Baez, Sly Stone, Steve Martin, Ben E. King -- all honored by the Library of Congress
- StoryCorps to Launch Global Expansion With $1M TED Prize
- Hofstra Event Looks at Bush Presidency
- Did Israel steal uranium from a town in Pennsylvania in the 1960s?
- Sequel to Nelson Mandela's Long Walk to Freedom to be published next year
- OAH denounces anti-gay legislation signed by Indiana governor
- U.S. historian denounces Japanese scholars' statement over wartime sexual slavery
- Timothy V Johnson Named Head of Tamiment Library