September 23, 2009

Media Dozes While Social Security Is on the Verge of Negative Annual Cash Flow

SocSecBrokeCard0309Ed Morrissey at Hot Air had the catch of the day yesterday when he revealed, based on Congressional Budget Office internal projections distributed to Congress during the summer, that the Social Security system will spend more cash than it takes in during the government’s next fiscal year ending September 30, 2010. Read about it there, or here, because you won’t see the establishment media acknowledge the existence of these revelations.

Morrissey isn’t clear as to when the report was prepared, but if it dates back to July or even early- mid-August, it’s possible that Social Security will show a measly positive cash flow of less than $10 billion when the dust settles on the current fiscal year that will end next week, compared to +$72 billion a year ago. That’s because the decay in Treasury’s cash collections during the current quarter has been that bad.

Here’s the relevant portion of the spreadsheet Morrissey obtained:


The green box shows cash inflows for fiscal 2009 through 2011, while the purple box has the cash outflows. The “Primary Surplus” figures in the red box represent positive (in 2009) or negative (in 2010 and 2011) cash flow.

The rest of CBO’s spreadsheet shows that the system will have tiny net positive cash flows from fiscal 2012 through fiscal 2015 (never more than $20 billion), and will begin to go irretrievably negative after that, until by 2019 the cash hemorrhage amounts to $63 billion.

Morrissey points out that the report lays bare the fundamental incompetence and/or dishonesty earlier this year of Peter Orszag, President Obama’s Director of the Office of Management and Budget:

…. Democrats wanted analyses that allowed them to ignore the problems in Social Security, and Orszag was happy to supply them. Douglas Elmendorf has had to right the ship at CBO while Orszag continues to blow his predictions at OMB, most notably in overall deficit projections, which Orszag had to admit were off by more than 40% and $2.2 trillion over the next ten years.

Of course, they were helped along by a complacent media unwilling to do math, and a host of apologists for the Left.

…. The situation at Social Security is much worse than this administration and Democrats in Congress want to admit. They want to continue busting the deficit and creating new entitlements while the existing ones careen towards collapse.

The situation may be much worse than even the CBO portrays.

First, the current year’s projected postive “Primary Surplus” of $18 billion is itself be on shaky ground, because the current quarter has been horrible. Here are the collections of employment taxes, which include both Social Security and Medicare, in July and August of 2009 compared to July and August of 2008 (links are to respective Monthly Treasury Statements; information is at Table 3 of each report, and is the sum of “on budget” and “off budget” employment taxes, numbers are in millions):

July 2009 — $64,003; July 2008 — $65,277; year-over-year decrease of $1.3 billion, or 2.0%
August 2009 — $63,569; August 2008 — $65,440; year-over-year decrease of $1.8 billion, or 2.9%

Employment tax collections in September 2008 amounted to $71.307 billion, and were helped by the fact that there were five high-collection Mondays that month. Because this year has only four Mondays, a $10 billion negative year-over-year September decline in employment tax collections is not out of the question. That would mean a cumulative difference during the quarter of about $13 billion ($1.3 + $1.8 + $10). How much of that is Social Security and how much is Medicare cannot be determined.

Now let’s look at how bad September collections overall have thus far been:


Social Security tax collections are part of the first and third line items above, and are more than likely a significant element of their combined shortfall of over $40 billion.

As to future year collections, Morrissey points to work by “steveegg” at No Runny Eggs showing that tweaking CBO’s rather optimistic assumptions of payroll tax growth downward by very small percentages in 2012 and 2013 would cause all future years to come in with a negative cash flow.

Given how poorly the economy is performing, and more to the point, how even the Obama administration has acknowledged that high unemployment rates will linger for quite some time, even the No Runny Eggs scenario may turn out to have been optimistic.

Separately, as to total collections for September, though I believe that $210 -$215 billion is a more likely result, I would not be surprised if this month’s grand total comes in at less than $200 billion. That would be a breathtaking year-over-year decline of well over 25% in one of the most important collections months of the year.

Cross-posted at



  1. Come on Tom, put a positive spin on this.

    1. Congress can no longer embezzle from the SS trust fund for vote buying programs, they have to borrow the money from China and Japan.

    2. We, the workers of America will finally start getting our stolen money back as Congress will be forced to take money from the general tax revenue to make up the difference. Of course, Congress will jack up someone else’s taxes to pay for it instead of cutting spending on their vote buying social programs.

    3. (Long shot) To save money on the military budget, maybe Obama will tackle the source of world terrorism by ordering the assassinations of the Iranian Mullahs pulling Ajad’s strings. Eliminate the number one sponsor of world terrorism to eliminate the need to defend against it.

    Comment by dscott — September 23, 2009 @ 10:11 am

  2. #1, oh that’s funny. What got into your coffee today?

    Don’t know about the assassination part, but at least supporting the millions of demonstrators in Iran last week would have been helpful.

    Comment by TBlumer — September 23, 2009 @ 11:50 am

  3. #2, Punch drunk from the infuriatingly obvious failure of Democrats refusing to believe what is before their eyes. Hmm, maybe I should submit this to the Onion?

    Liberals are so busy trying to cover up their failures they spend more energy on the cover up than actually solving the problems they cause. Just once I would like to see a Democrat admit they were the source of the problem instead of blameshifting, covering up and proposing worse solutions. Hell will freeze over before that will happen.

    When we are forced to accept the actions of incompetent dolts making decisions for us, sarcasm is the only non violent response. Of course, that would mean more of the pubic would have to stop being so gullible to vote for these dolts. :-(

    Comment by dscott — September 23, 2009 @ 1:00 pm

  4. Speaking of insanity:

    “In fiscal year 2009, which ends next week, Treasury will have issued $7 trillion in gross issuance — that’s in a 12-month period,” Ramanathan told a financial markets conference in New York.

    “This issuance was necessary to meet nearly $1.7 trillion in net marketable borrowing needs, nearly $1 trillion more than what we raised last year,” he added.

    I’m speechless. So they rolled over $5.3 trillion in existing bonds, nearly half the total national debt. hmmm, hmmm, hmmm

    Comment by dscott — September 23, 2009 @ 4:19 pm

  5. [...] at Tags:administration, Air, August, box, Budget, cash, cash collections, cash inflows, catch, CBO, [...]

    Pingback by Media Dozes While Social Security Is on the Verge of Negative Cash Flow — September 23, 2009 @ 4:19 pm

  6. link:

    Comment by dscott — September 23, 2009 @ 4:19 pm

  7. An interesting chart by the Federal Reserve:

    Take note: Securities held outright (1) 1,532,747 + 31,378 change week ended Sep 9, 2009 +1,052,929 change from week ended Sep 17, 2008

    The figures the chart says are in millions.

    So that’s $1,532,747,000,000 Correct?

    So the Fed bought $1,052,929,000,000 since Sept 2008!!!!!

    Of that total figure, is in Mortgage-backed securities (4) $650,702,000,000! SINCE SEPTEMBER 2008!!!!! $650 BILLION.

    Comment by dscott — September 23, 2009 @ 4:32 pm

  8. More bad news. Consider what happens when the democrats legalize 12-20 million illegal aliens and the amount of claims increase by 8-14%. With that the amount of welfare claims and various “gimme” schemes will also be overburdened resulting in even more debt to states and the federal govt. It’s all downhill from here, and to be fair, it was Bush who got the snowball rolling with poor decisions and Obama was more than happy to double down on the stupidity.

    Comment by infinitewisdom4u — September 23, 2009 @ 9:01 pm

  9. First things first; thanks for the mention.

    I could easily have limited the post-recession income growth to the historical average of roughly 4% (or specifically the FY2015 4.02%). I re-ran the numbers with that upper limit, and it does indeed get even uglier: The minimum primary deficit balloons to $6 billion in FY2012 (compared to $2 billion that year and a minimum of $1 billion in FY2013), and the FY2019 primary deficit jumps to $101 billion.

    Predicting the timing of the recovery is beyond my ability to predict. A later recovery would again make things worse.

    Calculating what not having that “interest” available to re-”invest” in the general fund would require figures I don’t have easy access to, but I suspect that would mean the long-term bonds would need to be called early starting right about 2019 with absolute “fund” exhaustion coming several years earlier than the 2037 currently projected.

    As for the immediate situation, the July 2009 payroll tax collections were 1.2% above July 2008, but the August 2009 payroll tax collections were 2.1% below August 2008.

    Of note, August 2009 had the 5 Mondays that September 2008 did, and still the monthly primary deficit was over $5.8 billion, the highest since the anomalous August 1990 deficit of $18.4 billion (caused by a shift of most of September’s SS payments to August). That would make the rolling 12-month primary surplus a mere $26.9 billion, the lowest since June 1995-May 1996.

    To get to the $18 billion (really, $17.5 billion-$18.4 billion) FY2009 primary surplus, the September 2009 would need to drop roughly 12.9% from September 2008. It certainly seems possible given the numbers for the first 21 days of September.

    Comment by steveegg — September 24, 2009 @ 12:25 pm

  10. #8, I must regrettably agree on W’s poor judgment in not enforcing the Immigration Law consistently. I would add a caveat in that Clinton hold over appointees whom W didn’t replace at then INS had already started on that failed policy in the last two years of Clinton’s term. Somewhere out there is a chart that shows the immigration arrests dropping off in 1998 until we got on W’s case about the situation.

    Comment by dscott — September 24, 2009 @ 12:32 pm

  11. Correction on what it would take to get to the CBO estimate of a FY2009 primary surplus of $18 billion – it would take a September primary deficit of just over $5.2 billion, or a revenue drop of, depending on rounding, 7.3% and 9.0%. I forgot that the $3.1 billion primary surplus in September 2008 would drop off the 12-month rolling total.

    Comment by steveegg — September 24, 2009 @ 2:02 pm

  12. #9 and #11, see my comment at NB. Looking at the whole year’s MTS’s the situation is not the same as you indicate, which means we must be looking at difference data.

    I know MTS has SocSec and Medicare in it, so a link to what you typically look at which is solely SocSec would be welcome.

    Sept. going negative by as much as you indicate would be news in and of itself, esp because there are 4 Fridays and 4 Mondays.

    Comment by TBlumer — September 24, 2009 @ 2:31 pm

  13. [...] Tom Blumer over at both NewsBusters and BizzyBlog has some disturbing news on the immediate taxation front. He looked up the payroll/self-employment [...]

    Pingback by No Runny Eggs » Blog Archive » The Social Security crater continues — September 24, 2009 @ 2:34 pm

  14. It is a case of different data. My base data comes from Social Security’s Office of the Chief Actuary

    As for September, using the mid-session estimates from OMB on what the fiscal-year off-budget Employment and General Retirement take will be (that is entirely Social Security’s), subtracting what the Treasury has received so far, and making some rough estimates for the remainder of the figures from the SSA, SocSecurity should run a deficit of a bit over $4 billion. Of course, I note that OMB was significantly off on its estimates last year.

    Comment by steveegg — September 24, 2009 @ 3:04 pm

  15. #14, thanks for the link. Now I remember why I didn’t have a link when I posted about Feb., i.e., it’s an input form.

    Comment by TBlumer — September 24, 2009 @ 3:11 pm

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.