The Spectator’s Phil Klein alerts us to the release of the Annual Report of the Social Security and Medicare Boards of Trustees. The Trustees have found that due to the recession, benefits paid out are overtaking revenues brought in even faster than projected. The trust funds for these programs will be bankrupt sooner than expected but more importantly, the programs will become a serious drain on the federal budget far sooner than that. That’s because long before the trust funds are exhausted, Uncle Sam will need to take money from general revenues to ‘repay’ the trust funds.

For years we heard that the trust funds masked the true size of federal deficits; that’s because the government borrowed from the those funds to cover current federal expenditures. Sooner than expected, the flow of funds will reverse, and we’ll be forced to spend hundreds of billions in general revenue to pay for entitlements.

The Congressional Budget Office recently projected that Social Security will collect just $3 billion more in 2010 than it will pay out in benefits. A year ago, the CBO had projected that Social Security would have a much higher $86 billion cash surplus for the 2010 budget year, which begins Oct. 1.

The trustees report projected that Social Security’s annual surpluses would “fall sharply this year,” then remain at a reduced level in 2010 and be lower in the following years than last year’s projections. The report said that the Social Security annual surplus would be eliminated entirely in 2016, reflecting increased demands from the wave of 78 million baby boomers retiring.

That means Social Security will have to turn to its trust fund to make up the difference between Social Security taxes and the benefits being paid out beginning in 2016. The trustees projected the trust fund would be depleted in 2037, four years earlier than the 2041 date in last year’s report…

While the smaller surpluses that will begin this year will not have any impact on Social Security benefit payments, the government will need to borrow more at a time when the federal deficit is already exploding because of the recession and the billions of dollars being spent to prop up a shaky banking system.

The jig is up. We’re at the point where any rational observer ought to recognize that when it comes to the federal deficit, we need to quit digging. Barack Obama’s trillion dollar deficits, and his $10 trillion in new debt, make it impossible to address the looming bankruptcy of our entitlement programs. Barack Obama and the Democrats have overwhelming majorities in the House and Senate. It’s time they stopped throwing gasoline on the fire.