Social Security Is Now In The Red
For years, the Federal Government has kept budget deficits lower than they would have been by borrowing money from Social Security. However, now this borrowing has lead to a situation where Social Security is now in the red. In fiscal year 2010, Social Security will run a cash deficit of $28 billion.
As pointed out at Hot Air, the government is reporting that Social Security is running a surplus of $92 billion. However, the government accounting includes interest payments of $120 billion on the debt owed to Social Security leading to an “on paper” surplus.
However, the $120 billion in interest payments are being paid by IOUs. This means that $120 billion of Social Security revenue is only a promise to pay from the federal government.
Social Security will either have to send out $28 billion in IOUs to Social Security recipients or receive at $28 billion bailout from the tax payers.
Further compounding the problem is that the current figures do not include $13 billion in $250 checks that the Obama administration wants to send to Social Security recipients.
For years the federal government has relied upon Social Security surpluses to cover part of the federal budget deficit. Now that Social Security is out of cash, this isn’t possible.
How does this impact you?
With American families struggling to make ends meet, the government continues planning to run a spending deficit putting the country trillions more into debt. This eventually needs to be paid down.
Americans need to remember that a federal budget deficit is the difference between what the government takes in and what it spend in one year. The national debt is the permenent number that we owe and must pay interest on to keep current. The spending deficit each year adds to the national debt.
Putting in simple terms, the government at least needs to make the minimum payment each month on their credit card to stay current. In the case of the Government, the minimum payment continues to grow each month as the balance continues to grow.
The American Taxpayer will soon not be able to bail out the government or cover the interest payments on the debt that the government continues to grow. What will happen when America goes bankrupt?