In February, we reported that in 2010, Social Security would start running deficits in 2010.  Well, Social Security deficits have officially arrived, as analyst Michael Barone lays out in the Washington Examiner:

Social Security tax receipts for the first half of 2010: $346.9 billion; Social Security benefits payments for the same period: $347.3 billion. Before this year, projections have always been that Social Security wouldn’t cross that line into negative cash flow for five years or so. Now it’s a reality. Congress has been spending Social Security’s positive cash flow for years. Now there’s no positive cash flow to spend.

These deficits are a result of the current economic climate.  Federal revenues have continued to dwindle as job creation stagnates, reducing tax collection along with it.  Unemployment has also forced many Americans into early retirement, adding to the ranks of those dependent on Social Security.

Whether the current Social Security deficits are temporary or not, they are projected to become permanent in 2016.  From then on, the Social Security Trust Fund is expected to pay out benefits until 2037.  But as Michael Tanner of the Cato Institute explains, even that isn’t reassuring, since “the Trust Fund contains no actual assets. The government bonds it holds are simply a form of IOU, a measure of how much money the government owes the system. It says nothing about where the government will get the money to pay back those IOUs.”  In other words, the Trust Fund doesn’t actually have any real money in it.

Social Security benefits will not be reduced in response to today’s growing deficits.  Instead, taxpayers will pay the difference, via the Treasury, to keep benefits checks from bouncing.

The early arrival of the need for a Social Security bailout should serve as a severe reminder to the Obama Administration that entitlement reform is needed now to ensure a sustainable economic future for the country.  Heritage expert David C. John writes, “Social Security’s future has arrived early. After years of talk about how well-funded the program is, the reality is that never-ending deficits will eat up money that could be used for other programs or tax cuts. Despite reassuring words that these deficits are temporary, the reality is much worse. These deficits are likely to be permanent, and the only way out of this cash crunch is to fix the program.”