Blahous: Background on the Worsening Social Security outlook

Chuck Blahous of the Hudson Institute has a good explanation of the changes in the 2009 Social Security Trustees Report, coupled with sound general analysis of the situation.

On Tuesday, May 12, the Social Security Trustees released their 2009 report.  The following summary of the report is intended for those already familiar with the basics of Social Security financing, and who are looking primarily to understand what is different about the 2009 projections relative to previous ones. 

In a nutshell, the story is this:  Social Security's finances are significantly weaker than foreseen even just a year ago.  Last year, the Trustees projected that the program would enter permanent cash deficits in 2017.  This year, that date has been moved forward slightly, to 2016.  Not since the 1983 reforms has the program been so close to operating deficits.  The projected Social Security insolvency date (of legal significance but less meaningful as a measure of the program's economic impact) has advanced by four years, from 2041 to 2037.

The whole piece is well worth reading.