Social Security Bailouts Begin in 2010

Kathryn Nix / February 02, 2010

Fiscal reform has become a hot topic in Washington as spending hits all-time highs and Congress and the President continue to push several new high-ticket items closer to law.  Lawmakers and concerned citizens alike are shifting focus to the looming fiscal crisis that will be caused by from entitlement spending on the Medicare, Medicaid, and Social Security programs.  But for Social Security, that red ink isn’t so far off in the future—in fact, it’s scheduled to arrive in 2010.

In the Washington Post, business columnist Allan Sloan highlights a report from the Congressional Budge Office (CBO) which confirms that in 2010, Social Security outlays will exceed revenue for the first time in 25 years.  The CBO report shows that Social Security will earn $120 billion in interest on its trust fund, which would seem to cover its $92 billion surplus.  Not so.  As Sloan explains, the interest does not constitute funds with which to pay benefits.  It is nothing more than IOUs from the Treasury.

The CBO report shows decreased deficits for 2011 and 2012, with Social Security breaking even thereafter.  But as The Heritage Foundation has warned, by 2016 Social Security will begin running permanent deficits. (more…)