The Washington Post has a story out today on what I believe is one of the most overlooked aspects of the economic crisis — that rising unemployment is pinching payroll tax revenue. For years, the government has collected more in Social Security taxes than it pays out, which has allowed it to use the surplus to fund other government operations. But now, the CBO estimates that the surplus is expected to virtually disappear next year, reaching just $3 billion, and that by 2017 it will start running deficits. Sure, there’s a “trust fund” that isn’t projected to run out until 2041, but that is only comforting to those who pretend that the money doesn’t ultimately come from the same piggy bank.
And then there’s this:
“This is not a problem for Social Security, it’s a problem for fiscal responsibility,” said Christian Waller, a public policy professor at the University of Massachusetts at Boston and a senior fellow at the Center for American Progress. He said the new estimates would force President Obama and his budget director, Peter Orszag, “to stay on track in what they have set out to do, and that is rein in deficits.”
Yeah, and they’re doing a good job of it, too — so good, in fact, that the projected cumulative deficits over the next decade are only $9.3 trillion (as opposed to $4.4 trillion they would be under current law).