The Ides of March, 2010 may be remembered as the day the entitlements crash began. Social Security liabilities exceed inflow, and SSA has begun tapping its vault full of Treasury bonds. “Too bad” (as the AP story notes) “the federal government already spent that money…”

Technically, Social Security is now broke. Since it’s politically unthinkable to admit this, the Treasury will have to go cap in hand to the bond markets and buy more short-term debt in order to keep the benefits flowing. This will heavily increase a structural federal deficit that is already unsustainable.

The government will fail to do anything meaningful to address the problem — because there is nothing it can do. Cutting payouts isn’t on the table, not for an administration ideologically committed to redistributionism.

Nor will raising taxes work. According to the Tax Foundation’s figures we’d have to triple the tax rates on the top 50% of earners just to cover the Federal FY 2009 budget of $3.55 trillion, let alone cover any debt or accumulate revenue for future years. And the bottom 50% only pays 2.89% of revenues; there’s no money there.

The next stage of this slow-motion train wreck will arrive when the bond rating agencies admit that the U.S. is broke and not going to get un-broke, and downgrade the risk rating on Treasuries from AAA. There’s already talk of this and warnings from the agencies; I can’t see it being more than nine months out at this point. If Obamacare actually passes, expect the downgrade sooner rather than later; vaporous talk of “bending the cost curve” isn’t fooling anyone with actual money on the table.

When Treasuries get downgraded, the Treasury will have to offer higher interest rates to sell bonds, increasing future deficits and putting solvency further out of reach. At some point not too long after that, the bond markets (and by that I mean China and Japan) will stop playing. Game over.

We have passed the fiscal event horizon. A singularity looms. Debt default, hyperinflation, or something equally traumatic is coming soon.

UPDATE: At Zero Hedge, economist Tyler Durden says: “In a word: the US collects enough money organically (via taxes) to cover less than a third of its outlays.”