The Social Security Administration wants back the $2.5 trillion its has loaned to the US Treasury. It is no wonder. The agency will have to pay out $29 billion more this year that it takes in from payroll withholding, according to the AP.
The tension between what the Treasury’s needs and what the Social Security Administration needs is about to set up an epic battle which could affect what America will have to borrow to cover deficits in the next ten years, a period when borrowing is expected to be at record levels without repayment of Social Security loans..
Fifty-two million people get Social Security payments, according to the news service. But, the ability the agency has to pay them could be compromised if the federal government has trouble paying back what it owes. The Social Security Administration estimates that it has enough money to last it until some time after 2030, but assumptions about what will happen that far in the future are often well off the mark.
The US national debt is expected to rise to close to $20 trillion by the end of this decade. If GDP growth is slow then, the Treasury’s ability to borrow money will be stymied forcing it to raise interest rates, further increasing the deficit with large debt service obligations. That will be about the time that the Social Security Adminstration will want all of its cash back, and the Treasury may have to stonewall.
Douglas A. McIntyre
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