CBOs Long Term Projections for Social Security
Social Security’s Finances, With Scheduled Benefits. CBO projects that if Social Security paid benefits as scheduled, spending on the program would increase from 5.0 percent of gross domestic product (GDP) in 2022 to 7.0 percent in 2096, and revenues would remain around 4.6 percent of GDP over the same period. The Old-Age and Survivors Insurance Trust Fund would be exhausted in 2033, and the Disability Insurance Trust Fund would be exhausted in 2048. If the trust funds were combined, their exhaustion date would be in 2033.
CBO 12-16-22
In CBO’s projections, Social Security’s actuarial deficit over the next 75 years is equal to 1.7 percent of GDP, or 4.9 percent of taxable payroll. That is, the federal government could maintain the necessary trust fund balances through 2096 if it immediately, and permanently, raised payroll tax rates by about 4.9 percentage points (or implemented an equivalent reduction in benefits or combination of tax increases and benefit reductions). After 2096, however, the gap between revenues and outlays would widen, and shortfalls would continue to increase.
Sum of you may buy into the progressive solution of taxing all wages without limit. If that were done Social Security remains insolvent. The trust funds will run out in 2059 at which point all beneficiaries will face a sudden 12% benefit cut. CRFB Calculator.
I continue to be amazed that for decades we have been talking about fixing Social Security while ignoring the fact Congress could have made minor, gradual changes over the years that would have resolved all the issues.
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Social Security is not funded annually so Congress doesn’t address it as such. The changes to Social Security are not simple or small because somebody will pay a lot more (those currently above the SS wage limits) and every worker will pay at least a good bit more (higher social security tax rates). Also future retirees may see lower benefits if age limits are increased to qualify. These changes affect the mood of taxpayers, therefore no politico wants to touch the “third rail”.
There is always talk of a 75-year funding plan, but I remember in the 80’s when changes were made to funding the program and we’ve been talking about changes for years now. I doubt if 20 years of smooth sailing is achievable. But at least it will be done eventually.
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I remember when Congress used to pass a budget in September to avoid a shutdown. Now they just kick the can down the road month after month, year after year. It seems like they pass a small continuation budget almost every month, the latest was the defense spending bill. I believe it is now institutionalized that it is okay to keep kicking the can down the road. Congress will not even find the Social Security can to kick until 2033.
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