The oil spill is sticking, so to speak, as an indictment of the administration because it demonstrates that Obama doesn't care so much about solving crises as he does about exploiting them to increase his political power.
Thus, a new crisis is emerging that has gone virtually unnoticed. Michael Barone draws our attention to a report indicating that Social Security cash flows are becoming negative—the system is paying out more in benefits than it collects in taxes—five years earlier than expected.
For decades, the positive cash flow from Social Security has gone into the fraudulent "Social Security Trust Fund," which meant that Congress spent the money and wrote itself an IOU. Now that the cash flow has gone the other way—now that the IOUs are coming due—we've finally reached the point when Social Security starts to yawn open and swallow the entire federal budget. This is the beginning of America's fiscal apocalypse.
"Social Security at Mid-Year," Bruce Krasting, Bruce Krasting (blog), June 10
There is enough published information from the SSTF [Social Security Trust Fund] to make some observations for the first six months of 2010….
[What follows are charts showing that Social Security tax receipts for the first half of this year will total $346.9 billion while benefits paid out will total $347.3 billion.]
The numbers are going in the wrong direction. Receipts are down across the board while expenses keep rising….
These lines were not expected to cross for at least another five years….
Some, including the CBO, see this as a temporary phenomenon. I disagree. For there to be a return to a positive result of (payroll tax revenue [minus] benefits) the economy would have to grow on a sustained basis at 5% and inflation would have to remain near zero. Those conditions are unlikely to be met….
All heavily indebted borrowers, whether they be individuals, corporations, or sovereigns are highly dependent on cash flow to service debt. When cash flow goes negative individuals and corporations go bankrupt. Most sovereigns do, too.
