The darling of the politicans in Washington has become not-so darling. Social Security, for decades a hidden slush fund that allowed pols to spend beyond what they taxed, has turned into an albatross. The Ponzi Scheme has unraveled.

According to the New York Times , less than two years ago, Social Security Trustees projected the fund would have income exceeding expenses until 2037: "The trustees did foresee, in late 2008, that the recession would be severe enough to deplete Social Security's funds more quickly than previously projected. They moved the year of reckoning forward, to 2037 from 2041."

Last year the crossover estimate was revised to 2017. Surprise! Surprise! The program is now in deficit. From this point on, there is nothing for politicians to "steal" from the "trust fund." Instead, they will have to use general tax revenues to fund Social Security shortfalls. The fund has flipped from a cash-generator to a cash-eater.

How important was this source of revenue to politicians? An earlier post indicated

The size of the slush fund was substantial. Over $5 Trillion was removed and spent. To put this into perspective, this amount was enough to cover total Federal spending for the first four years of the first Clinton Administration.

This year the need is reasonably small. Next year the shortfall will be larger, ditto every year thereafter. The rate at which the deficit grows is mind-boggling. After all, the present value of the shortfall is estimated at $17.5 Trillion. That means the rate at which taxes will have to be increased to pay for government programs and the shortfalls need to increase at a mind-boggling rate.

Welcome to the collapsing world of government. Welcome to the beginning of the end of the welfare state here and around the world. The bills for all the good intentions are coming due. There is no way they can be paid.

Remember when George Bush wanted to privatize Social Security? Back then, it was probably reasonable to change the fund and not renege on promised benefits. Now it is probably not possible, such is the rate of deterioration in the fund.

At some point the privatization idea will be raised again. This time it will receive "broad political support." There will be no principle involved. As a slush fund, the program had value for pols. As a cash drain, it is a liability that cuts into the "profitable" part of their criminal enterprise. It will be exorcised in some fashion.

It will likely be dumped on the American people, in the same fashion that bad banking loans have been.

Monty Pelerin blogs at www.economicnoise.com and can be contacted at montypelerin@gmail.com