The Social Security Trust Fund wracked up another monthly deficit for October. The shortfall was $4.2 billion. This is the 5th consecutive month of red ink for the Fund. The total for the period comes to $15bil. Blame the economy and the boomers for this problem. Some basic measures of the Fund's performance are rapidly deteriorating.
A critical measure is the ratio of Payroll Tax receipts to Benefits paid. The following chart (click to enlarge) looks at that ratio over time. That ratio will fall below 1.0 for the full year 2009. As of today we are living off of the interest. 
In November the SSTF will pay out $56.9 billion. They will be lucky to take in $47 billion in tax income. The deficit will be near close to $10 billion. Interest income, and other income add another $140b annually to the Fund’s top line. But with monthly deficits of $10b on an operating basis, the Fund is running very close to break even for 2010. That possibility is not on anyone’s radar screen.
My estimate for benefits in 2010 is $756 b. If we assume total GDP growth of 2% the resulting ratio is 5.75%. That is up from 4% just a few years ago. It is rising fast. The following is from a CBO report on the Fund from August 2009. These guys think it's going to 6% in 2030? This train will arrive 18 years early.
Both CBOE and SSTF project that Social Security’s outlays will rise from 4.8 percent of gross domestic product (GDP) this year to about 6 percent in 2030 and will stabilize thereafter.
The US is struggling with health care legislation. Inside of this debate is a cost of about $1 trillion. We can’t agree on this because of the question, “Who will pay?”
Health care is small beer compared to SS. My estimate on the current imbalance of the fund is close to $7 trillion on a NPV basis. We are on a ship traveling at high speed toward a rocky shoal. And it is foggy and no one has a clue.
SS is too hot a potato to come up for a resolution prior to next year’s elections. That would imply it comes up for discussion sometime in 2011. The Fund can’t wait that long. I just keep wondering when the MSM will wake up to this.
