The future of the Social Security system: Part five

Stephen Lovejoy, Michigan State University Extension -

Social Security: cash flow problem or debt limits?

Social Security Deficits, 2005-2025 (Billions of Dollars). Source: CBO, Social Security Trustees
Social Security Deficits, 2005-2025 (Billions of Dollars). Source: CBO, Social Security Trustees

Many Americans believe that the Social Security System cannot run a deficit but the fact is that Social Security is running a cash deficit today, and will keep running deficits until its trust funds run out. Michigan State University Extension discusses the difference between a cash flow deficit and going into debt (e.g. borrowing).

Social Security is legally barred from going into debt, spending more than it takes in over the life of the program, but it can run a deficit, spending more than it takes in during a single year. In 2014, for example, Social Security ran a cash-flow deficit of $73 billion. According to Operations of the Combined OASI and DI Trust Funds,

in Current Dollars, over the next decade, the trustees project cash-flow deficits of $1.3 trillion, and CBO projects deficits of $2 trillion. Even including interest income, the program is projected to begin running deficits by 2017 or 2020. 

Because the Social Security trust funds currently hold $2.8 trillion in reserves, the program is projected by the Trustees to continue to run “annual deficits for every year of the projection period” until the trust funds are depleted in 2034. At that point, current law bars Social Security from paying benefits beyond what is collected in revenue.

Other articles in this series: 

This article was published by Michigan State University Extension. For more information, visit https://extension.msu.edu. To have a digest of information delivered straight to your email inbox, visit https://extension.msu.edu/newsletters. To contact an expert in your area, visit https://extension.msu.edu/experts, or call 888-MSUE4MI (888-678-3464).

Did you find this article useful?

You Might Also Be Interested In

Understanding Social Security benefits

Understanding Social Security benefits

Published on October 3, 2019

Buying on a land contract instead of a mortgage

Buying on a land contract instead of a mortgage

Published on July 10, 2020

Are you responsible for the debt of your deceased spouse?

Are you responsible for the debt of your deceased spouse?

Published on January 18, 2021

On a fixed income and trying to get by

On a fixed income and trying to get by

Published on January 15, 2020

Be wise this holiday shopping season

Be wise this holiday shopping season

Published on November 12, 2019

Our elderly need our watchful eye

Our elderly need our watchful eye

Published on October 3, 2019

  • Spartans Will.
  • © Michigan State University
Michigan State University wordmark

MSU is an affirmative-action, equal-opportunity employer, committed to achieving excellence through a diverse workforce and inclusive culture that encourages all people to reach their full potential.

Michigan State University Extension programs and materials are open to all without regard to race, color, national origin, gender, gender identity, religion, age, height, weight, disability, political beliefs, sexual orientation, marital status, family status or veteran status. Issued in furtherance of MSU Extension work, acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture. Quentin Tyler, Director, MSU Extension, East Lansing, MI 48824. This information is for educational purposes only. Reference to commercial products or trade names does not imply endorsement by MSU Extension or bias against those not mentioned.

The 4-H Name and Emblem have special protections from Congress, protected by code 18 USC 707.

We comply with the Federal Trade Commission 1998 Children’s Online Privacy Protection Act (COPPA).