First baby boomer applies for Social Security

Here they come. Here's the situation:

Under current law, Social Security won't have enough money to pay promised benefits in 2041 but there is another crunch much, much sooner, the result of the the federal government relying on Social Security to pay for its annual spending.

When Social Security gets payroll taxes it pays out most of the money in benefits. The rest is supposed to go into a trust fund. Instead the government has been spending the money on other government programs, and putting IOUs into the trust. When Social Security needs the money it'll turn to the government waiting for the payback. But the government won't likely have any.

"This money has been borrowed, it's been spent, and there's no easy way to put it back," [former Democratric congressman Tim] Penny said.

The loan is expected to be called in 2017, when the largest bloc of the boomers - those born between 1946 and 1964 - will be retiring. By the mid 2020s, the federal government will have to fork over more than $200 billion a year, and then it climbs to more than $300 billion a year.

At the same time, all that is money that was being used for federal programs will no longer be available, meaning everything - from education to defense to the environment - will face a financial crunch.

In other words, without reform, everything we call "the government" will go towards entitlement spending. So far it appears that the only Presidential candidate willing to propose something resembling a solution is Fred Thompson, who advocates indexing benefits to inflation instead of wage growth:

"The only way to fix Social Security is to reduce benefits or increase taxes," said David John, an analyst at the conservative Heritage Foundation who provided the deficit estimates. "At least Thompson has been honest enough to adopt one or the other of those approaches."

Otherwise the political parties are falling into two camps:

Most Republicans are opposed to raising the level of income on which Social Security taxes are collected; currently, the taxes stop after an individual reaches an annual wage of $97,500. Most Democrats, meanwhile, have ruled out cutting benefits, while leaving the door open for tax hikes on wealthier Americans.

Raising taxes on rich Americans? Who says the Democrats are out of fresh ideas?!