A rather dismaying headline crossed my desk this morning from our friends at Hot Air. Social Security will tip over into annual deficits … now. And given that the source of the story was The New York Times it’s hard to write this off as “right wing alarmism.” A long expected – but not expected just yet – milestone has apparently been reached.

This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office. …

Mr. Goss, the actuary, emphasized that even the $29 billion shortfall projected for this year was small, relative to the roughly $700 billion that would flow in and out of the system. The system, he added, has a balance of about $2.5 trillion that will take decades to deplete. Mr. Goss said that large cushion could start to grow again if the economy recovers briskly.

There’s plenty of political spin to be had on this story from both sides, but the numbers don’t lie. Personally, I still maintain that even at present rates of depletion, it would be many years before the system actually went completely belly up. And if our elected leaders can muster the intestinal fortitude to tackle the issue, it’s still fixable without any drastic, draconian measures. They just won’t be politically popular, especially with older voters who tend to show up at the polls most reliably.

But that doesn’t mean that there aren’t some bigger underlying problems here. As Ed Morrissey points out, that $2.5 trillion “lock box” of Al Gore’s has long since been raided, and the cash was replaced with a stack of I.O.U notes.

Er, what $2.5 trillion balance? Al Gore (another name absent from this report) talked about a “lockbox” for Social Security assets, but they’re vaporware. It consists of Treasury IOUs that the US has to pay by selling more debt. The program has no hard cash of its own. As it falls into the red, benefits have to be paid through borrowing, whether the SSA does it directly or Treasury does it indirectly. Congress spends it all every year in order to cover its own deficits, or at least make those deficits look better than they would otherwise.

So we kind of, sort of “have” the money to pay out the benefits. We just don’t actually… you know… have the money. This turns what might have been a manageable problem into an even bigger headache. One of the largest areas of concern among voters today is the dismal job Washington has done of managing the public purse, with spiraling deficits and a T-Rex sized national debt. There will be no support for cutting benefits across the board, but the money has to come from someplace, so when the S.S. system calls in those notes, more debt will have to be accumulated. It’s a situation which can quickly spiral out of control.

The Republicans didn’t fix the problem while they were last in power (though to give credit where due, they at least floated some ideas for it, flawed though I may have found them) and now the Democrats have gotten their wish and are in charge of the country. Can they come up with a plan to take this bull by the horns? Or will they kick the can further down the road?