Social Security Payouts Overwhelm Payments Into the Fund in 2010 

March 2010

According to the Congressional Budget Office, the bursting of the real estate bubble and the so called “Great Recession” that have stunned the job market, home prices and has also reduced payments the government receives to support Social Security. In 2010, the system is projected to pay out $29 billion more in benefits than it receives in payments. This milestone will occur six years before this was expected, reports the New York Times. 

The Times cites Stephen C. Goss, chief actuary of the Social Security Administration, saying that that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax. 

Current projections show Social Security will exhaust its funds by 2037 unless the program is altered or receives a significant monetary infusion. The Social Security Administration will issue its annual report soon giving is own projections and full accounting. 

One of the issues that must be addressed is the shrinking labor supply. As baby boomers age and retire and begin collecting from the fund, some labor economists’ project there may be a national labor shortage, as early as 2016. By law, Social Security cannot pay out more than its balance in any given year. Annual payments from the found are roughly $700 billion. 

The social security fund has an estimated balance of about $2.5 trillion that will take decades to deplete. 

This is not the first time the Social Security fund had come close to insolvency. In the late 1970’s the program also had significant funding shortages, with no reserve fund. In 1982 the federal government installed a commission, led by Alan Greenspan, to put guidelines in place. Greenspan’s recommendations at the time were: raise taxes, lower benefits or bail out the program by tapping general Treasury revenues. 

According to an interview the New York Times conducted with now former Federal Reserve Chairman Alan Greenspan the same three choices exist today. 

To read the New York Times report on this issue by Mary Williams Walsh and Stephanie Strom visit: