Social Security Trustees Report Just Released

According to the Trustees report, Social Security will run a cash flow deficit of $41 billion (0.3 percent of GDP) this year, will return to small surpluses in 2012-2014 of a few billion dollars a year, and then will begin running increasing deficits from 2015 onward. By 2020, the system will run a cash flow deficit of over $100 billion (0.4 percent of GDP) and by 2030 it will have a shortfall of nearly $460 billion (1.2 percent of GDP).

In the short-term, the health of the Social Security program deteriorated compared to last year's estimates, due to worse economic conditions. Over the longer-term, it improved somewhat, due to the effects of higher tax revenues resulting from more compensation in the form of cash wages as opposed to heath care benefits, resulting from health care reform.

Due mainly to aging and an expanding retired population, costs are expected to increase from 4.8 percent of GDP today to 6.1 percent of GDP by 2030. These costs are generally in line with last year's projections of 4.9 percent of GDP this year to 6.1 percent by 2030. Meanwhile, revenues are expected to be slightly higher than last year's projections, rising from 4.6 percent of GDP today, to 4.9 percent by 2020, and stabilizing at around that level through the 2030s before dropping down to 4.6 percent by 2080.

Over the next 75 years, on top of the $2.5 trillion in government bonds which are currently in the Social Security Trust Funds and which must eventually be repaid, the program still faces an average shortfall of 1.92 percent of taxable payroll-below last year's projected 2 percent shortfall, but a significant imbalance nonetheless.

(Source: Committee for a Responsible Federal Budget)

U.S. Economy Continues to Falter

The Federal Government reported this morning that U.S. employment fell for a second straight month in July as more temporary census jobs ended while private hiring rose less than expected, pointing to an anemic economic recovery.

The unemployment rate was unchanged at 9.5 percent in July for a second straight month, just below market expectations for a rise to 9.6 percent. The steady jobless rate largely reflected a drop in the labor force as discouraged workers gave up the search for jobs.  Glad to see that the Stimulus really worked.  Once the Census jobs are gone, the numbers will look even worse.

In addition to this great economic news, the WH announced late yesterday that another Obama economic "expert" is leaving.  Christina Romer, one of Obama's most vocal supporters of the Stimulus, will be heading back to California where she will teach economics at Berkley.  I'm sure she'll be welcomed with open arms at the epicenter of the Left.