Facing Up to the Truth About Social Security

According to the Congressional Budget Office, the $659 billion in benefits that Social Security will pay out this 2009 fiscal year will exceed payroll taxes collected ($653 billion) for the first time since 1984, when that huge Social Security tax increase was enacted to "fix" Social Security for the boomer generation.

A year ago, the CBO projected there would be $703 billion in Social Security surpluses from 2009 to 2018. Recently, they have revised those estimates downward to be only $83 billion -- a pretty thin cushion in an era of trillions! And those assumptions include a return to economic growth next year, as well as no cost-of-living increases for recipients over the next three years.

In reality, it's likely that the projected SS surplus -- our benefits - will turn to a deficit that will deepen in the next few years.

As soon as Congress "fixes" the banking, housing, and automobile crises, they'll be forced to turn their attention to Social Security. Most likely, Social Security will become a "needs-based" payout to low-income, elderly recipients -- not a return of the "investments" you made with all those FICA deductions from your pay check every month over your working career.

Let's get this straight. For years, the actuarial surpluses in the Social Security "Trust Fund" have been used to offset the annual federal budget operating deficits. Now we've reached the point where the federal budget deficit will be nearly $2 trillion this year, enough to soak up just about all of the "trust fund."