Down The Hill
Right now Washington can see nothing but yet another entitlement program.
But at the same time, Social Security is sliding down the hill:
Based on the assumption that these other numbers will remain static and that payroll receipts will stabilize to the 2009 numbers for the remainder of the year the following forecasts of the full calendar year can be made:
Benefits paid will exceed Payroll tax receipts by $40b (+660b, -700b). In my opinion this is the primary measure of financial soundness. This number was -$5 billion in 2009.
The Fund uses the ratio of total tax receipts to benefits paid as its soundness measurement. Based on the 1st Q results it would appear likely that the full year results of this ratio will be negative $20b ($700b-680b). Should that happen, it would be the first time in the Fund’s history. The Trustees of the Fund have suggested that this significant milestone will not occur until 2017. This party seems to be starting six years early than was planned.
When I look at the Fund I look at cash flow. All of the experts on this topic say that is a dumb way to look at it. Annual cash flow is meaningless when you are looking at something that has $2.5T in assets and will, under the very worst of conditions, be able to pay the bills for 15 years or so. I disagree. It’s all well and good to ignore cash flow when cash flow is positive. But when it goes negative it is the first gentle step that leads to a very slippery and steep slope.
3 Comments »
RSS feed for comments on this post.
Leave a comment
Line and paragraph breaks automatic, e-mail address never displayed, HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
The only way to fix this problem is to purge washington of BOOMERS or anybody older! Not gonna happen though, Grandma and the AARP are gettin’ theirs and the grandkids won’t be any wiser!
Comment by Jimmy Pete — 3/11/2010 @ 12:25 pm
I don’t know–there’s an awful lot of people that weren’t too happy with AARP for supporting this bill–the medicare cuts are still on the table to pay for adding health insurance for the masses. That point gets covered up in the rhetoric, but I just read another article today that mentions the “savings” from those cuts.
AARP is just another self-indulgent lobby that had seniors convinced that they were on senior’s side. I think that illusion is evaporating. I could be wrong. A lot of people believe it when the call comes in “Give us some money and we’ll lobby Congress for you.” They don’t then pay any attention to whether the organization has their interests in mind.
Comment by Maria — 3/11/2010 @ 3:58 pm
From what I recall, we should have seen the first SS deficit last year, followed by two years of surplus, then deficits until sometime in the 20s.
This was covered in various articles over the last few months. I believe that the healthcare reform is just a play to shore up social security.
Don’t forget, the AARP lost tons of members last year thanks to their healthcare bill support, which means not every older individual is behind AARP and the healthcare bill.
Comment by Andrew — 3/15/2010 @ 10:55 am