Social Security is going bankrupt
Tea Party Economist – Gary North – 10/26/2012
I want to talk about the inevitable bankruptcy of the Social Security system. I have made this case publicly for 35 years.
The beginning of the bankruptcy began in fiscal year 2010. Early in that year, I produced a 90-minute video predicting that this would happen before the end of the fiscal year.
Retirement Armageddon – Gary North – 90 minutes
THE TRUST FUND’S DEFICIT
Here is the assessment by the Trustees in their 2012 Annual Report. They tell us that the program is producing a deficit.
In 2011, Social Security’s cost continued to exceed both the program’s tax income and its non-interest income, a trend that the Trustees project to continue throughout the short-range period and beyond. The 2011 deficit of tax income relative to cost was $148 billion, and the projected 2012 deficit is $165 billion. The sizes of these deficits are largely due to a temporary reduction in the Social Security payroll tax for 2011 and 2012.
The legislation establishing the payroll tax reduction also provided for transfers from the General Fund of the Treasury to the trust funds to “replicate to the extent possible” revenues that would have occurred in the absence of the payroll tax reduction. Including these general revenue reimbursements, the 2011 deficit of non-interest income relative to cost was $45 billion, and the projected 2012 deficit is $53 billion (page 2).
Where did the money come from to offset the deficit? The Trustees were quite clear: “transfers from the General Fund of the Treasury to the trust funds.”