The Social Security trajectory: up then down down down

From Congressional Quarterly "Congress to Lose Its 'Cash Cow' Soon"

The annual Social Security cash surpluses that have long offset other federal expenses likely will peak in 2009, one year after the first baby boomers become be eligible for this retirement benefit. By 2017, the surplus will be gone and the federal government will be on the hook to find new funding for Social Security as more and more Baby Boomers age into the program.

Treasury Secretary Henry Paulson included estimates on the surplus in a report released yesterday, widely seen as his attempt at a Social Security wake-up call. The report reinforces the message sent by Social Security Trustees earlier this year - Congress will soon lose the annual Social Security surpluses that lawmakers have used to fund other government activities.

The annual Social Security cash surpluses likely will peak around $99 billion in 2009. About a decade after that, Social Security could have a deficit rivaling its peak surplus, according to a chart in the report.

What's to be done?

Social Security has three options for its future financing, according to GAO Chief David Walker, who, like Paulson, has been pushing for Social Security reform. The U.S. government will have to raise taxes, cut spending or borrow more from the public. "Treasury will honor those claims - the United States has never defaulted," Walker said in a January testimony to Congress. "But, there is no free money."

True that. But don't expect any straight talk from the Presidential candidates who have no intention of putting forward any painful, yet honest, solutions for the entitlement problem. Are there any leaders in Washington or are we just going to keep kicking this can down Pennsylvania Avenue?

More - The Treasury Department's report on Social Security: "Not taking action is thus unfair to future generations. This is a significant cost of delay." Also, from the WashPost: "The longer policymakers wait to address the problem, the more severe the tax increases or benefit cuts will have to be, the report said, echoing warnings made by others, including Social Security trustees and congressional researchers."