How's That Change Thing Working Out for You?

Social Security Deficit Now Permanent:

Social Security will run a permanent yearly deficit when looking at the program’s tax revenues compared to what it must pay out in benefits, the program’s trustees said Friday in a report that found both the outlook for Social Security and Medicare, the two major federal social safety-net programs, have worsened over the last year.

Medicare’s hospital insurance trust fund is now slated to run out of money in 2024, or five years earlier than last year’s projection, while Social Security’s trust fund will be exhausted by 2036, a year earlier than the prior projection.

The trustees stressed that exhaustion of the trust funds doesn’t mean the programs will stop paying all benefits. Social Security could fund about three-fourths of benefits past 2036, and Medicare could pay 90 percent of benefits past 2024 under current trends.

So what's the matter with this?  Lots of government programs are contributing to the deficit, right?  In fact, most government programs don't even attempt to collect the revenue required to run them, despite liberal jokes about forcing the Pentagon to run on bake sales.

The problem is that for the all of most or all of my lifetime, Social Security has been collecting more money than it pays out.  The remainder was not put in a box in the White House, or even as gold in Fort Knox.  It was simply spent (with a promise to repay later).  Most of those years the government was still in deficit spending anyway, so that money was just simply being used to pay for government.  Now, as the deficit balloons, and more and more tax money goes to simply paying the interest on the debt, Social Security switches from the net income column to the net loss column.

What is unsustainable will not last forever; unfortunately the end of unsustainable practices is often abrupt and unpleasant.