Bruce Krasting has used the Social Security’s estimate of December 2012 benefits paid and taxes received to extrapolate what we’re likely to see when the Social Security trustees will say when they issue their annual report in six months. The news, as I reported a couple of weeks ago, is not good.
Among his findings and conclusions are that:
- Benefits paid increased by 6.9%
- Taxes received increased by 6.5%
- Interest received decreased by 1.7%
- There was a cashflow shortfall of $46.7 billion in 2012
- Social Security will never see a cashflow surplus again
The implication of that is that interdepartmental debt will be decreased to pay for the shortfall and debt owed to the public will be increased. He estimates that the shortfall will reach critical mass in about five years. I think the wheel will really hit the road in about eight years when the trust fund runs dry, receipts are sharply below outlays, and the Congress will be left with two very unpalatable alternatives. Either they can allow the benefits they pay to fall or they can just pay the full benefits anyway, rapidly increasing debt owed to the public and/or sucking up an increasing amount of the total budget.