Vanishing Surpluses-Yet Again

by Bruce Webb

Last month we were delivered alarming news from AEI: Slowdown Slashes Social Security Surplus illustrated with the table above in turn derived from this source SSA-Trust Fund Data. And sure enough if you followed the link and inserted Feb 2009 that is exactly what you would see. But what if you put it into series and included the months Dec to March? Well you get the following.

First thing of note. The combined surplus returned in March. While DI continued to run a deficit OAS ran more than enough surplus to cover it. It looks like February may have fell victim to the fact that it has three fewer workdays which for people who work hourly that much less in FICA taxes. On the other hand benefits are paid monthly in equal amounts. Which suggests that February will always be a poorly performing month.

Now move to January and compare it to February. Note anything different? Well the fact that revenue from taxation on benefits was only $13 Million in Feb as opposed to $6001 million in January maybe, mighta made the difference.

Finally we can check out December. Interest on investments in Feb was $92 million, in January only $25 million, while in December it was a whopping $58 BILLION (yes with a ‘B’).

So what happens when you pick a month that one-has a smaller FICA stream due to fewer work days, two-doesn’t get a big infusion from tax on benefits like January did, and three-did not get a huge infusion from accrued interest like December did? You get a mediocre to negative result in that month relative to other months.

Which leaves one last question. Are the guys from AEI incompetent? Or just skilled cherry pickers?