Social Security is already operating at a loss!

For years I have been pointing out that although Social Security projected adequate income until some year well into the future (now 2037), the really important date was the date when current income was not enough to cover current outgo.  Until very recently, this was projected to happen between 2013 and 2017.  Because of the recession and the many unemployed, underemployed, those fully employed at lower incomes, and early retirements largely due to loss of jobs, Social Security will spend more money this year than payroll taxes will provide.  The Social Security Program must start cashing in the IOUs the government issued to it to borrow its income for spending on other programs over the last few decades.  This will now drive the federal government even deeper into its colossal hole of debt.

Of course, the Obama economics ignorant followers will cry for an increase in tax rates.  But not on those who are now paying little in tax rates.  No, they will call for an increase on the wealthy.  That is, they will call for an increase on those who own small, medium, and large businesses and provide jobs and good incomes to many, many Americans.  Except, with higher marginal tax rates, they will produce less taxable income, fewer jobs, and invest less in capital equipment as I noted in my previous post.  This will slow down the growth of the economy and decrease government tax revenue over the longer haul and add to the Social Security and Medicare liability problems.  The only possible helpful thing to do is to cut the higher marginal tax rates and the corporate tax rate and allow the country to grow as best it can.  That may not solve the problem with the need to shovel money into the Social Security program and Medicare rather than borrow their excess income as we have come to be used to doing, but it is the least harmful present response to this problem any but an idiot has long seen coming.

Bush tried to deal with it, as Reagan had before, but the Democrats have always insisted we hide our heads in the sand on this one, as on so many other issues relating to matching our means and our wants as a nation.  Dealing with the need for net Social Security outgo, rather than income, is now going to be very painful.  This is now present pain, rather than future pain.