Next Crisis, please ...

The Congressional Budget Office released some new testimony on the Outlook for Social Security today.

Some of it came in the form of three Budgetary Perspectives, by Douglas Holtz-Eakin, Director.

In 2008, the leading edge of the baby-boom generation will become eligible for early retirement benefits. Shortly thereafter, the annual Social Security surplus —the amount by which the program’s dedicated revenues exceed benefits paid— will begin to diminish (see Figure 1). That trend will continue until about 2020, when Social Security’s finances will reach a balance, with the revenues coming into the system from payroll taxes and taxes on benefits matching the benefit payments going out. Thereafter, outlays for benefits are projected to exceed the system’s revenues.

The key message from those numbers is that some form of the program is, in fact, sustainable for the indefinite future. With benefits reduced annually to match available revenue (as they will be under current law when the trust funds run out), the program can be continued or sustained forever.

Thank you, Director Holtz-Eakin.

But, meanwhile, over at the Commerce Department,

President Bush had to toss off his remarks concerning "our problem"

Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust. We're on the ultimate pay-as-you-go system -- what goes in comes out. And so, starting in 2018, what's going in -- what's coming out is greater than what's going in. It says we've got a problem. And we'd better start dealing with it now. The longer we wait, the harder it is to fix the problem.

Josh Marshall was listening, too. Here's a relevant excerpt from his take on Bush's remarks

Following up on our earlier posts about the president's apparent desire to default on the US Treasury notes held by the Social Security Administration, two points ...

First, most of President Bush's personal wealth appears to be tied up in bonds. Do his get honored? Or is he out of luck too?

Second, what the president said today almost certainly violates his oath of office in which he swears to "preserve, protect, and defend the Constitution of the United States."

That would be the Constitution which reads (Am.XIV, Section 4): "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

-- Josh Marshall