This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.
Stephen C. Goss, chief actuary of the Social Security Administration, said that while the Congressional projection would probably be borne out, the change would have no effect on benefits in 2010 and retirees would keep receiving their checks as usual.
The problem, he said, is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.
Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances.
Let's look at three charts compiled from information provided by the CBO:
Mandatory spending (which included SS) has been increasing as a percentage of the total federal budget. This means that Washington has less and less ability to cut spending without a change in the law.
Mandatory spending as a percent of GDP has been pretty stable. This is a very good development as it indicate we're far from the point of financial Armageddon.