Social Security took in only $3 billion more in taxes last year than it paid out in benefits — a $60 billion decline from 2008, according to federal data. The slide in revenue occurred sooner than Social Security actuaries had expected, for three reasons:
• Payroll tax revenue that was growing at a 4.5% average annual clip along with wages flattened out in 2009 because of rising unemployment and pay raises that largely disappeared.
• The number of retired workers who began taking benefits increased by 20%; those taking disability jumped by 10%.
• Monthly benefits were raised 5.8% because of a spike in energy prices the year before.
Social Security was saved from bankruptcy in 1983 by a bipartisan deal that increased payroll taxes, taxed some benefits and gradually raised the retirement age to 67. That was supposed to keep the system solvent at least until 2058, but the projection has slipped to 2037.
The impact of the recession shows that "for all these projections, unexpected things happen," says Maya MacGuineas of the Committee for a Responsible Federal Budget.. "Money has to be found to repay those trust funds."
President George W. Bush proposed voluntary private retirement accounts in 2005, but the effort stalled in Congress. President Obama has proposed giving Social Security and other thorny fiscal issues to a bipartisan commission.