Social Security could be in the red this year
WASHINGTON — Social Security will pay more in benefits than it receives in payroll taxes in the current fiscal year, six years earlier than expected, the Congressional Budget Office reported yesterday.
Last spring, Social Security trustees reported that expenses would exceed revenue beginning in 2016. Since then, applications for benefits have increased because people are retiring early due to the recession, and that, combined with high unemployment, means fewer workers paying taxes.
“There’s so much unemployment,’’ said Robert Pozen, chairman of Boston-based MFS Investment Management. “There’s less going in, and more people are taking early retirement.’’
The CBO projects that the trust fund will be $29 billion in the red during the fiscal year ending Sept. 30, and will run deficits for the next three years. After projected surpluses in 2014 and 2015, the trust fund again would have deficits from 2016 onward.
While Social Security payments to recipients won’t be affected, the end of trust fund surpluses will prevent future presidents from using them to reduce federal budget deficits. The deficit for the fiscal year that ended Sept. 30 would have been $1.55 billion, rather than $1.41 billion, had the Social Security surplus been excluded.
“The impact is not going to be on benefits,’’ Pozen said. “It’s going to be on the budget process. There has been this cushion that has been used by both parties.’’
White House spokesman Robert Gibbs said “the president is committed to keeping Social Security strong and solvent for current and future retirees.’’