Sick and getting sicker, Social Security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037, congressional budget experts said Wednesday in bleaker-than-previous estimates.
The massive retirement program has been suffering from the effects of the struggling economy for several years. It first went into deficit last year, but had been projected to post surpluses for a few more years before permanently slipping into the red in 2016.
This year alone, however, Social Security will pay out $45 billion more in retirement, disability and survivors' benefits than it collects in payroll taxes, the nonpartisan Congressional Budget Office said. That figure nearly triples -- to $130 billion -- when the new one-year cut in payroll taxes is included.
Congress has promised to replenish any revenue lost from the tax cut, but that's hardly good news, either, adding to the federal budget deficit. In another sobering estimate, the congressional office said government red ink this year will increase to $1.5 trillion, the most in U.S. history.
More than 54 million Americans receive Social Security benefits, averaging $1,076 per month.
The outlook for the program has grown more sour as the nation has struggled to recover from the worst economic crisis since Social Security was enacted, during the Great Depression. In the short term, Social Security is suffering from the weak economy that has payroll taxes lagging and applications for benefits rising. In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits.
The projected deficits add a sense of urgency to efforts to improve Social Security's finances. For much of the past 30 years, the program has run big surpluses, which the government has borrowed to spend on other programs. Now that Social Security is running deficits, the federal government will have to find money elsewhere to help pay for benefits.
"So long as Social Security was running surpluses, policymakers could put off the need to fix the program," said Andrew Biggs, a former deputy commissioner at the Social Security Administration who is now a resident scholar at the American Enterprise Institute. "Now that the system is running deficits, it simply becomes clear that we need to act on Social Security reform."
President Obama said Tuesday night in his State of the Union address that he wanted "a bipartisan solution to strengthen Social Security for future generations."
The president, however, has not embraced recommendations from a debt commission he appointed last year, including a gradual increase in the full retirement age, to 69 from 67, over 65 years.