Social Security Will Pay Out More Than Taxes Recieved In 2010

The annual report of the trustees for Medicare and Social Security...said the Social Security program is projected to pay out more in benefits than it collects in taxes for the first time this year and next year.

...The trustees report said that Social Security pension and disability payments will exceed revenues for this year and 2011, reflecting a deep recession which has knocked millions of people off payrolls, which means they are not paying Social Security payroll taxes.

The report said the program would return to the black in 2012 through 2014 but that benefit payments will again exceed tax collections in 2015. For every year after 2015, the report projects that Social Security will be paying out more than it receives in tax collections under the impact of the retirements of 78 million baby boomers.

The government will then have to turn permanently to its trust fund to make up the difference between Social Security taxes and the benefits being paid out. The trust fund, which exists in paper form in a filing cabinet in Parkersburg, W.Va., are bonds backed by the government's "full faith and credit" but not by any actual assets. That trust fund, currently at $2.5 trillion, has been spent over the years to fund other parts of government.

To redeem the trust fund bonds, the government will have to borrow in public debt markets or raise taxes.

Ricardo Alsonso-zaldivar and Martin Crutsinger
Associated Press