Let's not forget about Social Security

Allan Sloan has done another first-rate job trying to focus Americans' attentions on the cluster that is Social Security. He's cut through all the tripe that we keep hearing from our leaders and pundits that says Social Security is fine for another 20 or 30 years and even then it will still be able to to pay 80% of benefits. Do yourself a favor and take 10 or 15 minutes to read the whole story. I'll give you the money 'grafs.

Just last year Social Security was projecting a cash surplus of $87 billion this year and $88 billion next year. These were to be the peak cash-generating years, followed by a cash-flow decline, followed by cash outlays exceeding inflows starting in 2017.

But in this year's Social Security trustees report, the cash flow projections for 2009 and 2010 have shrunk by almost 80%, to $19 billion and $18 billion, respectively. How did $138 billion of projected cash go missing in just one year? Stephen Goss, Social Security's chief actuary, says the major reason is that the recession has cost millions of jobs, reducing Social Security's tax income below projections.

But $18 billion is still a surplus. Why do I say Social Security could go cash-negative this year? Because unemployment is far worse than Social Security projected. It assumed that unemployment would rise gradually this year and peak at 9% in 2010. Now, of course, the rate is 9.5% and rising -- and we're still in 2009.

Sloan does more than call attention to the issues. He offers honest to goodness thoughtful (and dare I say non-partisan) solutions. If we don't start paying attention to these generational accounting problems, we will be on our own and have to suffer tax increases.