The Social Security Trustees Annual Report, which was issued 5 months late, states "the financial health of the Social Security Trust Funds and the long-range outlook remains unchanged," but the facts show the program is in serious trouble.

My report in ConservativeHQ.com explains that Social Security surpluses have been used to fund the general operations of the federal government and the Trust Fund was given special issue, non-negotiable IOUs.

According to the Treasury Department's Financial Management Service, as of the end of July 2010, these IOUs amounted to $2.602 Trillion.

In Fiscal Year 2009 alone, $137.297 Billion was "borrowed" from Social Security and spent on other federal programs.

In Fiscal Year 2010, the payroll tax will not generate enough revenue to pay expected benefits. The Treasury will have to make up from general revenue the $41 Billion shortfall (not counting interest due the Trust Fund--which is immediately borrowed again).

Social Security Commission Michael Astrue is not too concerned. "The fact that the costs for the program will likely exceed tax revenue this year is not a cause for panic," he said.

The Annual Report projects another shortfall in payroll taxes in 2011 and then small surpluses from 2012 through 2014, assuming the economy rebounds.

In 2015, the amounts collected in payroll taxes will permanently NOT be enough to pay full Social Security benefits.

The Social Security Trustees maintain, "The annual deficits will be made up by redeeming trust fund assets…until reserves are exhausted in 2037."

But these "assets" are just IOUs from the government to itself. Every budget produced by both Republican and Democratic administrations has admitted there are no real assets in the Trust Fund.

In the Budget of the U.S. Government for Fiscal Year 2010, the White House Office of Management and Budget spells out:

"These balances are available for future benefit payments and other trust fund expenditures, but only in a bookkeeping sense. The holdings of the trust funds are not assets of the Government as a whole that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury…The existence of large trust fund balances, therefore, does not, by itself, increase the Government's ability to pay benefits."

Likewise, the Congressional Budget Office is clear:

"Social Security's finances are often discussed in terms of the trust funds that are used in the federal budget to track outlays and revenues over the life of the program. Those
trust funds are mainly accounting mechanisms and contain no economic resources."

Thus, Bill Frezza, a partner in Adams Capital Management, concludes, "Not In 25 Years. Social Security Is Bankrupt Now."

"For the first time in its history, the Social Security program will pay out more money than it takes in. This watershed event will occur this year, to the tune of $41 Billion dollars. Under any rational accounting standards, this makes the Social Security program bankrupt. And that's right now, not in 25 years when the so-called Trust Fund becomes insolvent… All of the money collected from every American's paycheck throughout all of our careers is now gone…In its place are IOUs from Harry Reid, Nancy Pelosi, Charlie Rangel, and Barney Frank."