Since the Social Security program was overhauled in the 1980s, it has been, by every account, a success. However, in recent years, a weak economy has caused the program to slip, and in 2010 it posted its first deficit since that overhaul. In 2011, it is projected that Social Security will collect $45 billion less in payroll taxes than it pays out for various benefit programs including Social Security Disability and retirement programs. According to new projections, the program will continue to deficit until it is completely tapped in out in 2037.
Currently, approximately 55 million Americans receive retirement, disability or survivor benefits from Social Security, which number is only expected to grow as the economy stagnates and as the baby boomer generation ages into retirement. In addition, when less people are employed, there are less payroll taxes taken out of paychecks, and less money coming in the program. Therefore, it is likely that a bad problem may only get worse unless lawmakers take action.
An additional potential hurdle for Social Security Disability and other Social Security programs is the fact that the government has lent out its over $2.5 billion surplus for spending on other government programs. If those programs are unable to repay Social Security, there may be no money to give out.
In a seemingly counterintuitive act, Congress recently approved a two percent reduction on Social Security taxes for 2011, which is projected to raise the year’s deficit to $130 million. However, Congress has pledged to repay the lost revenue from general revenue funds, ensuring that Social Security will not be harmed by this action.
Source: NPR, “Social Security Posting $600B Deficit Over 10 Years”, 27 January 2011