For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.
Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.
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Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.
There is no way to close the gap between what is owed to Social Security recipients and what Uncle Sam is able to pay without some combination of the following: curtailing benefits, raising taxes, or decoupling annual increases from the Consumer Price Index. All of these actions will directly impact the Baby Boomer generation, which happens to be the least-prepared generation in American history to face retirement.
The street protests we've seen in Greece for the past few weeks will soon explode here. The difference will be the ages of the protestors. Our Baby Boomers, coddled and indulged since birth, are completely unable to contemplate austerity. They took to the streets in the 1960s because they were unwilling to make a civic sacrifice for the Vietnam War. They will take to the streets in their golden years, in walkers and wheelchairs. This will have a very ugly effect on American culture and politics in 2012 and beyond.
Perhaps that's why the Mayan calendar doesn't run past 2012. It must have been designed by a Mayan Baby Boomer who didn't want to face retirement.
Nota bene: Anthony J. Alfidi is not a Baby Boomer but is preparing for retirement without relying upon Social Security.
