(H/T – Amanda Carpenter)
Rep. Spencer Bachus (R-AL), the ranking memeber on the House Committee on Financial Services, did an interview with The Tuscaloosa News editorial board, and unleashed a shocker – Social Security could start running deficits before 2012, far earlier than the most-recent “Intermediate Case” estimate from the Social Security/Medicare Fund trustees of 2016 for the combined OASDI Social Security funds. Quoting Bachus:
The situation is much worse than people realize, especially because of the problems brought on by the recession, near depression….
What this recession has done to Social Security is pretty alarming. We’ve known for 15 years that we were going to have to make adjustments to Social Security, but we still thought that was seven or eight years down the road. But if things don’t improve very quickly, we’re going to be dealing with that problem before we know it.
Back in May, when the trustees issued their report, Ed Morrissey and I picked up on a disturbing trend – there were several months of the OASDI fund running a negative monthly balance, with a very slim 12-month (April 2008-March 2009) positive yearly balance. At the time, I said, “I might not bet on Social Security running red for a 12-month period this year, but I’ll take the ‘early’ in just about any pool.” Looks like the “early” will be paying out.
Revisions/extensions (9:06 pm 8/19/2009) – I just took a quick look at the April and May numbers (I’m wondering why June’s is not available; this time in May, March’s numbers were), and they’re not all that encouraging:
– April had a net positive inflow (less “net interest”, which really is a future tax increase) of just under $20.5 billion. That compares very unfavorably to April 2008, which had a net positive inflow of about $24.3 billion.
– May had a net negative inflow of $1.9 billion, compared to a net positive inflow of $3.1 billion in May 2008.
Taking out the bogus positive of December 2008, that’s 6 out of the last 10 months that had a net negative inflow.
Since I previously warned that looking month-to-month is not a particularily good indicator, let’s put that in terms of year-over-year. That puts the 12-month rolling net inflow, as of May 2009, at just $43.3 billion, $8.9 billion less than the same number just 2 months prior.
One more thing – going back to my May post, I discussed the stoichastic model first sleuthed out by Chuck Blahous. Using a 5,000-run model, the trustees found that half of the time, Social Security went into the red before the end of 2014.
Meanwhile, the 2011 time frame Bachus talked about to The Tuscaloosa News is within the 80%-confidence window of that model. Indeed, that window starts in 2010, and runs until 2017.
R&E part 2 (12:51 pm 8/20/2009) – Welcome to the craziest part of the extended Hot Air universe. If you didn’t read Ed’s current column at American Issues Project, I recommend you do so sometime today.
In the meantime, I encourage you to take a look around and enjoy the hospitality Shoebox and I (but mostly Shoebox) have to offer.
R&E part 3 (9:18 am 8/21/2009) – Welcome Doug Ross @ Journal readers. Again, I encourage you to take a look around and enjoy the hospitality Shoebox and I have to offer.
