Bankruptcy - Social Security Stunner; Bankruptcy of Nation Moved Up Several Years - Apr. 1, 2009 | Blogs at Chris Martenson - Bankruptcy, Government, Social Security, US
Obama is talking tough with the Big Three, even letting on that the bankruptcy of GM and Chrysler is a very real possibility and may happen soon.
Since these are bankrupt companies, I suppose this makes a certain amount of sense, leaving aside the perplexing silence on why a similar approach is not being taken with insolvent banks.
I guess it's possible that manufacturing paper profits is now “more American” than fashioning real goods out of hard materials.
But it goes further than this. The current administration might as well be worrying about the fact that the US government itself is hurtling towards bankruptcy.
Not only are debts exploding - moving smartly past “unsustainable” and into “ruinous” - but revenues (tax receipts) are falling like a rock.
Yesterday it was reported that the difference between Social Security income (taxes) and outlays (benefits payments), which is known in Washington-speak as “the SS surplus”, would shrink to zero next year.
The U.S. recession is wreaking havoc on yet another front: the Social Security trust fund.
washingtonpost.com
"With unemployment rising, the payroll tax revenue that finances Social Security benefits for nearly 51 million retirees and other recipients is falling, according to a report from the Congressional Budget Office. As a result, the trust fund's annual surplus is forecast to all but vanish next year -- nearly a decade ahead of schedule -- and deprive the government of billions of dollars it had been counting on to help balance the nation's books. "
First of all, let’s clear something up. There is no such thing as the Social Security “Trust Fund”. A “trust fund” implies that there are funds held in trust somewhere. Instead the Social Security account consists of several 3-ring binders filled with government IOUs which will have to be repaid by taxpayers (surprise!).
Attached is a picture of Bush physically standing next to the entire SS “trust fund”.
You could replicate the entire thing with about a $300 shopping trip to Staples, unless you wanted the fancy locking cabinet too. Then you might have to expend closer to $700 in total.
In the chart found at the link note the extreme deterioration in surplus funds between the 2008 and 2009 forecasts
Investor's Business Daily: Surpluses For Social Security Are Drying Up
From a budget-busting perspective, last year where the US government had a $73 billion Social Security surplus to spend, this year it will be a paltry $16 billion and next year it will be a number indistinguishable from zero. It is hard to overstate the importance of this shift.
This means several things. Instead of $703 billion coming in over the next 10 years, the current (overly optimistic) projection calls for only $83 billion. This means at least another $620 billion in fresh borrowing will have to occur.
More importantly, this means that the United States eventual date with bankruptcy has been moved forward by about 8 years or so. It also means that instead of being some future problem, a few administrations down the road, it is a near certainty that the current administration will have to confront some very difficult funding decisions that will be forced by the inability to borrow enough to pay for everything.
This isn’t necessarily a bad thing. For those who question the wisdom of having troops stationed in 150+ countries the funding crisis will translate into reduced foreign troop levels. The constantly expanding budgets of federal agencies tasked with keeping track of average Americans will face stiffer competition.
