President Obama just released his budget proposal for 2010. Here’s some notes I made last year on the 2009 budget of the Bush administration.

The fiscal year of the U.S. is not the calendar year but October to September. So the 2009 fiscal year starts in Oct 2008 and ends in Sept 2009. The 2009 budget estimates that, in Sept 2009, the U.S. will owe the Social Security (SS) trust fund $2.6T (pg 350). That’s ‘T’ for trillion, a thousand billion. For many years, taxpayers have been paying more in SS taxes than the Social Security Administration (SSA) has been paying out to retirees. In 2007, the SSA paid out almost $600B but collected more than that in SS taxes. Each year our Congress and President have “borrowed” that extra money. In 2007, they borrowed $175B from the SS fund. In 2008 and 2009, they will borrow about $200B in each year. As the “boomer” generation (born 1946 to 1964) starts retiring in 2009, there will be more retirees and retirees are living longer. In 2010 or 2011, there won’t be any extra SS tax money for the Congress and President to borrow. As the number of living retirees continues to grow, the SS fund will need to be paid back with current year tax revenues. To do that, tax revenues will have to increase somehow.