Entitlement Crash

From IBD

Social Security: Not worried about the government's retirement program because there's still time to fix it? Think again. The system could be operating at a deficit as soon as next year.

Washington has been working under the assumption that Social Security would continue to produce surpluses through 2016. It would not be until 2017 when the system would begin to pay out more than it took in through payroll taxes.

New estimates from the Congressional Budget Office, however, indicate that the date could be moved up seven years.

Last year, the CBO projected that the system would generate an $86 billion surplus in the current fiscal year ending Sept. 30. That has been downgraded to $16 billion, due to the sluggish economy.

In the next fiscal year, beginning Oct. 1, that surplus could be as low as $3 billion, a whisker away, in Washington terms, from being a deficit.

Defenders of the status quo will say that a possible deficit is not an issue. After all, the system has a $2.4 trillion balance in its trust fund that it can tap.

Forget that the trust fund does not actually exist, as Congress has already spent every cent of payroll tax revenue that has exceeded Social Security payouts. Then consider this: If the system starts running deficits seven years sooner than had been expected, the "trust fund" is going to be exhausted that much sooner. The entitlement train wreck that was off somewhere in the future is now suddenly just around the next bend.