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Downturn hits Social Security

March 25, 2010 at 1:26 AM   |   Comments

WASHINGTON, March 25 (UPI) -- Social Security payouts will exceed payroll tax revenues in 2010 because of the economic downturn, U.S. officials said.

The milestone had been expected to arrive in 2016 but the Congressional Budget Office says the recession has resulted in falling revenue due to persistent unemployment and larger than expected payments because many Americans, thrown out of work unexpectedly, have applied for Social Security benefits sooner than they had planned, The New York Times reported Tuesday.

Stephen C. Goss, chief actuary of the Social Security Administration, said the change will not affect benefits in 2010 and retirees will receive their checks without interruption.

Former Federal Reserve Chairman Alan Greenspan -- a leading figure in the plan to solve Social Security's projected difficulty two decades ago -- told the Times if the Social Security "trust fund gets to zero, you have to cut benefits."

Current projections suggest the system will not reach insolvency until about 2037, the newspaper said.

Although the current situation is not as critical as the one Greenspan is credited with helping fix in the 1980s, he said "very much the same issues exist today."

"Because of the size of the contraction in economic activity, unless we get an immediate and sharp recovery, the revenues of the trust fund will be tracking lower for a number of years," Greenspan said.

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