well... uh... good thing we didn't privatize, I guess.

Alright, the title is a bit dramatic. But in a Washington Post article today, the Congressional Budget Office warns that the fund's annual surplus may disappear thanks to recession-based drops in payroll contributions - ten full years ahead of schedule. It has long been known that Social Security was in trouble; it's just that no one thought it would happen so quickly.

The Treasury is about to face its day of reckoning when it comes to "using its MasterCard to pay off its Visa." WP reports:

While the new numbers will not affect payments to current Social Security recipients, experts say, the disappearing surplus could have considerable implications for the government's already grim financial situation.

The Treasury Department has for decades borrowed money from the Social Security trust fund to finance government operations. If it is no longer able to do so, it could be forced to borrow an additional $700 billion over the next decade from China, Japan and other investors. And at some point, perhaps as early as 2017, according to the CBO, the Treasury would have to start repaying the billions it has borrowed from the trust fund over the past 25 years, driving the nation further into debt or forcing Congress to raise taxes.

Oh, Treasury, how are you going to cover your butt for this one?

"This is not a problem for Social Security, it's a problem for fiscal responsibility," said Christian Waller, a public policy professor at the University of Massachusetts at Boston and a senior fellow at the Center for American Progress. He said the new estimates would force President Obama and his budget director, Peter Orszag, "to stay on track in what they have set out to do, and that is rein in deficits."

The CBO, Congress's nonpartisan budget scorekeeper, released its most recent estimates for the Social Security trust fund last week as part of its final budget projections for the fiscal year that begins in October.

The trust fund has long taken in more in revenue from payroll taxes and other sources than it pays out in benefits. Last August, the CBO predicted that surplus would exceed $80 billion this year and next, then rise to around $90 billion before slowly evaporating by 2020. But the rapidly deteriorating economy -- particularly the loss of more than 4 million jobs -- has driven those numbers much lower much faster, with the surplus expected to hit $16 billion this year and only $3 billion next year, then vanish entirely by 2017.

It's awfully easy to evangelize fiscal responsibility when hit with this news - but it is yet another example of too little too late. China isn't going to break off $700 billion to take care of America's aging population.

Add to this dangerous mix that new retirement and disability claims are expected to rise 12 percent this year compared to 2008 and what do you have?

The funky Ponzi accounting of Social Security is about to be exposed as the financial fraud that it is. The United States is rapidly running out of ruses and this revelation is just one more reminder of how precarious the financial state of the U.S. is.

"Over the past 25 years, the government has gotten used to the fact that Social Security is providing free money to make the rest of the deficit look smaller," said Andrew Biggs, a resident scholar at the American Enterprise Institute. "Now they've essentially got to pay their own way, at least a little more fully.

"Instead of Social Security subsidizing the rest of the budget," he said, "the rest of the budget will have to subsidize Social Security."

A broken economy, a wounded Federal Reserve, poor Treasury auction performance, dollar fears, an inept Treasury Secretary and now a collapsing safety net for America's rapidly aging population?

Ouch. This won't end well.