A scary bedtime story

As if the current financial mess is not enough, this Washington Post article reminds us that the long-term financial mess is just beginning. Social Security will start spending more than it takes in sometime between 2015 and 2020, depending on which of Social Security's estimate models you use. The raw data from Social Security's 2007 OASDI Report can be found here. The concept that Social Security has a "trust fund" (shown as "assets" in the SSA data) is a shell game, since the money would have to come out of the main Federal budget.

The following graph is from the same report, and is based on their "intermediate" cost model. The intersection between the blue line (income excluding interest) and the red line (costs) is the point at which costs will exceed incoming taxes. Worse, if the economy ends up in a multi-year recession, payrolls will decrease, which means that the day of reckoning for Social Security will be here even sooner.