I was originally going to append this to my post from the other day, but there are too many new items to cover.
First, Tom Blumer over at both NewsBusters and BizzyBlog has some disturbing news on the immediate taxation front. He looked up the payroll/self-employment tax numbers for the current quarter (2009 Q3/FY2009 Q4), compared them to the same quarter last year, and found that they were off 2.0% for July and 2.9% for August. Specifically for Social Security, the payroll/self-employment receipt numbers were off 1.7% for July and 2.4% for August.
Worse, the September numbers look like they’ll be another massive disappointment, with withheld income/payroll/self-employment tax receipts off over 17% through the third Monday of the month (9/21/2009 and 9/22/2008) and self-employment tax receipts off over 40% though the same period, or a net drop of almost 25%. Since not all income is taxed, the percent that the Social Security receipts would drop are necessarily a bit less. I’ll return to that momentarily.
Related to that, Tom noted that I could still be too optimistic in giving Social Security three years of 4.59% growth. I decided to re-run the numbers, capping the growthn at 4.02% (what the CBO calls for in FY2015), which reduces the rates in 2012, 2013 and 2014. That yields a minimum yearly primary deficit of $6 billion in FY2012, with FY2013 having a $10 billion primary deficit and FY2019 having a $101 billion deficit. I specifically avoided attempting to model what not having the “interest” that would be required to keep Social Security whole to plow back into the special bonds and certificates would do to the overall “trust fund” picture, but it is safe to say that complete exhaustion would be quite a bit earlier than 2037.
Second, the August 2009 “trust fund” numbers are finally in from Social Security, and the primary deficit is $5.833 billion, the worst since at least 1987. That puts the rolling 12-month primary surplus at $26.859 billion.
Since the September 2008 primary surplus of $3.126 billion drops off the rolling 12-month total, if there is a net zero primary surplus/deficit for September, that would put the FY2009 primary surplus at $23.733 billion. If there were a primary deficit between $5.234 and $6.233 billion, the CBO estimate of a FY2009 primary surplus of $18 billion (rounded to the nearest billion) would be correct. It would merely take a drop in Social Security payroll/self-employment taxes of about 7.4% to get there.