THe Associated Press reports that big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that’s happened since the 1980s.

The deficits — $10 billion in 2010 and $9 billion in 2011 — won’t affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn’t expect the increase to be so large.

What happened? The recession hit and many older workers suddenly found themselves laid off with no place to turn but Social Security. See article detail here:

A nationwide surge in Social Security disability claims has hit Michigan disproportionately hard.

The flood has caused a case logjam at the state’s five Social Security hearing offices, which have some of the longest wait times in the nation: nearly two years.

The delay in benefits approval, experts say, can mean a slow slide into poverty, with laid-off workers eating up their savings or even losing their homes. Older workers with health problems are increasingly turning to disability to stay afloat after losing their jobs because they are often less likely to find new employment, experts say. See story here:

According to Social Security Commissioner Michael Astrue and other experts on disability claims, the faltering economy is causing an increase in applications of between 15 percent and 25 percent. SSA originally anticipated receiving 2.6 million to 2.65 million applications for disability benefits in fiscal 2009, but upped its prediction to 3 million and another 3 million for 2010. Recently, the agency adjusted its estimates again, increasing the projection for 2010 to 3.3 million applications. …

Astrue says the agency has been making inroads, reducing processing times by 4 percent each of the past two years. The recession, however, has reversed the progress on the backlog of cases. At the beginning of 2009, SSA had 550,000 cases pending at the state level. The state-run SSA-funded Disability Determination Services do much of the initial processing and eligibility determination for applicants. The number of claims pending at the state level, which does not account for applications at other stages of adjudication, is now up to 725,000. …

“We’ve been stymied at the state level,” Astrue says. “There’s this callous ‘Kumbaya’ attitude that if there’s going to be pain, everyone has to suffer. For me, it’s beyond comprehension that you would make a civil service suffer unnecessarily and make claimants in desperate need of assistance wait much longer than they otherwise would.” …

The Chicago Tribune reports that for millions of Americans, getting a check in the mail from Social Security each month is a ritual.

But in the last year, theTreasury has been campaigning to get Social Security and Supplemental Security Income recipients to switch to a prepaid debit card.

The program, called Direct Express, is aimed primarily at the 4 million Social Security and SSI recipients who don’t have a regular bank account, but it’s available to anyone. The plastic card is automatically loaded with the amount of your monthly payment.

It’s billed as a safe, convenient way for consumers to get their government income while preventing fraud, theft and loss of checks.

Every year, the U.S. Treasury receives 1.4 million complaints from Social Security and SSI recipients.

“Those paper checks are problematic. They get lost, stolen or aren’t received on time,” said Phil Belisle, regional director of the U.S. Treasury’s financial center in San Francisco. “The debit card is a very safe alternative.”See full story here: