September 9, 2009 (Washington, DC) – Social Security will face a cash shortfall for the first time in decades next year, according to a little noticed report released late last month by the Congressional Budget Office (CBO).

As a result, seniors could face benefit cuts in as little as three years. Congress could instead raise taxes or authorize new borrowing to close the shortfall, but has never before addressed a Social Security deficit through long-term borrowing.

The annual summer CBO report reflects a quickly deteriorating economic climate, and is dramatically more pessimistic than a report issued just months ago. The CBO now predicts a cash shortfall of $10 billion for next year, significantly worse than the March report which forecast a surplus of $3 billion for next year, and the January report which forecast a $25 billion surplus.

The CBO report, entitled The Budget and Economic Outlook: An Update, forecasts shortfalls for six of the next ten years. 
 
“It’s no surprise to seniors that the economy has taken an already crippled Social Security system and brought it even closer to bankruptcy,” said Daniel O’Connell, chairman of The Senior Citizens League (TSCL). “Although all Americans have been hurt by this economy, seniors are our most vulnerable citizens and desperately need their benefits to keep up with inflation.”

Almost 70 percent of beneficiaries depend on Social Security for 50 percent or more of their income. Social Security is the sole source of income for 15 percent of beneficiaries.

The 37 million Americans aged 65 and over who receive a Social Security check each month are forecast to receive no Cost of Living Adjustment in their Social Security checks until 2012.

Seniors have never failed to receive an annual increase of less than 1.3 percent since automatic Cost of Living Adjustments (COLA) went into effect in 1975, and have never received less than 5.9 percent over a three-year period.

The Senior Citizens League is calling on Congress and the Administration to enact major Social Security reforms this year.

“Seniors have known for a long time that we’re going to have to reform Social Security, but overly-cautious politicians have continued to put it off,” said Shannon Benton, executive director of TSCL. “The longer we wait, the more painful the changes will be to today’s seniors and tomorrow’s retirees. We needed to reform the system yesterday, but we’ll settle for today.”

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With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.

See “Night in America,” our latest video about seniors at risk, at www.YouTube.com/SeniorCitizensLeague.