In 15 of Last 25 Months, Treasury Needed to Borrow Money to Pay Social Security Benefits
(CNSNews.com) - The U.S. Treasury has needed to borrow money to pay Social Security benefits in 15 out of the last 25 months on record because the Social Security system was in deficit in those months, with the cost of monthly benefit payments exceeding the Social Security tax revenues flowing into the Old Age, Survivors and Disability Insurance "trust funds," according to data published by the Social Security Administration.
Because the overall federal budget was in deficit during this entire period, the surplus revenues Social Security earned in the remaining 10 months of the last 25 was used during those months to pay ongoing general government expenses and was not saved to pay future Social Security benefits.
The government gave the Social Security trust funds IOUs for this money.
Prior to August 2008, the Social Security system usually—but not always—ran monthly surpluses, and surplus Social Security taxes were always used by the government to cover deficits in the general federal budget with a promise by the Treasury to eventually pay the money back to the Social Security trust fund when the funds were needed to cover anticipated shortfalls in Social Security revenue. Surplus Social Security tax revenue was never actually set aside to cover these anticipated deficits in Social Security. It was always immediately spent.
In August, the latest month on record, the Social Security system was $8.621 billion in the red, according to the Social Security Administration. That was the fifteenth month since August 2008 in which the system posted a monthly deficit. Back in August 2008, the Social Security system dipped into deficit by $118 million.
For more than decade prior to August 2008, however, the Social Security system ran up an unbroken string of monthly surpluses. The last time before August 2008 that the system posted a deficit in any given month was November 1997, when it ran a $154 million deficit. November was the only month in 1997 that the Social Security system ran a deficit.
In the 259 months from January 1987 to August 2010, according to data published by the Social Security Adminisrtation, Social Security ran deficits in 22 months, or about 8 percent of the time. In the 25 months since August 2008, Social Security has run deficits 60 percent of the time.
In a summary of their annual report released in August, the Social Security trustees predicted that the Social Security system would run an annual deficit in 2010 for the first time since 1983, and that it would also run an annual deficit in 2011. After that, the trustees predicted, Social Security would run “small surpluses” in 2012, 2013 and 2014, and then, barring changes in the system, lurch permanently into the red as the bulk of the Baby Boom moved into retirement and began collecting benefits.
“Social Security expenditures are expected to exceed tax receipts this year for the first time since 1983,” said the trustees.
“The projected deficit of $41 billion this year (excluding interest income) is attributable to the recession and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the trust funds in earlier years," the trustees said. "This deficit is expected to shrink substantially for 2011 and to return to small surpluses for years 2012-2014 due to the improving economy. After 2014 deficits are expected to grow rapidly as the baby boom generation’s retirement causes the number of beneficiaries to grow substantially more rapidly than the number of covered workers.”
Mark Lassiter, a spokesman for the Social Security Administration, told CNSNews.com that the recent shortfall was “due, in part, to more beneficiaries coming onto the rolls than originally anticipated due to the economic downturn.”
“There is no significant distinction between OASI and DI in terms of the additional beneficiaries. But the bigger impact is less revenue coming into the system than anticipated due to unemployment,” he said.
Here are the monthly deficits and surpluses for the Social Security system since August 2008, in millions of dollars. Deficits are shown in (parentheses):