Social Security

Updated Social Security projections – Congressional Budget Office

The outlook for Social Security is not improving and yet Congress does nothing and politicians talk nonsense – Sanders wants to improve benefits while in only thirteen years the trust funds will be exhausted. Every month that goes by makes solving the problem more difficult and more costly for those affected – which is all taxpayers. 

This should have been a top priority of this Administration right behind growing the economy. 

Social Security, which marked its 80th anniversary in 2015, is the largest single program in the federal government’s budget. About 72 percent of the roughly 60 million people who currently receive Social Security benefits are retired workers or their spouses and children, and another 10 percent are survivors of deceased workers; all of those beneficiaries receive payments through Old-Age and Survivors Insurance (OASI). The remaining 18 percent of beneficiaries are disabled workers or their spouses and children; they receive Disability Insurance (DI) benefits.

In fiscal year 2015, spending for Social Security benefits totaled $877 billion, or almost one-quarter of federal spending. OASI payments accounted for about 84 percent of those outlays, and DI payments made up about 16 percent.

Social Security is funded by dedicated tax revenues from two sources: payroll taxes and income taxes on benefits. Today, 96 percent of that tax revenue comes from the payroll tax—generally, 12.4 percent of people’s earnings that are subject to the Social Security tax. Workers and their employers each pay half; self-employed people pay the entire amount. Earnings up to a maximum annual amount—now $118,500—are subject to the payroll tax. The remaining share of tax revenues for the program—about 4 percent—is collected from income taxes on Social Security benefits. The tax revenues that funded the program totaled $786 billion in fiscal year 2015.

Social Security retirement and disability benefits and the program’s administrative costs are paid from two trust funds—one for the OASI program and one for the DI program. In addition to the tax revenues, the funds also receive intragovernmental interest payments on the Treasury securities they hold. In a given year, the receipts credited to a fund, including the interest credited on its balances, minus spending for benefits and administrative costs, constitute the trust fund’s surplus or deficit. Although the two trust funds are legally separate, in this report, CBO generally follows the common analytical convention of considering them as combined.

In 2010, for the first time since the enactment of the Social Security Amendments of 1983, annual outlays for the program exceeded annual revenues (excluding interest) credited to the combined OASDI trust funds. A gap between those amounts has persisted since then, and in fiscal year 2015, outlays exceeded noninterest income by almost 9 percent. As more people in the baby-boom generation retire over the next 10 years, CBO projects, that gap will widen. If current laws governing taxes and spending stayed generally the same—an assumption that underlies CBO’s extended baseline projections—outlays from the Social Security program would exceed revenues by almost 30 percent in 2025 and by more than 40 percent in 2040.

According to CBO’s extended baseline projections, the DI trust fund will be exhausted in fiscal year 2021, the OASI trust fund will be exhausted in calendar year 2030, and the combined OASDI trust funds will be exhausted in calendar year 2029. If a trust fund’s balance declined to zero and current revenues were insufficient to cover benefits specified in law, the Social Security Administration would no longer be permitted to pay full benefits when they were due. In the years after a trust fund was exhausted, annual outlays would be limited to annual revenues: All receipts to the trust fund would be used, and the trust fund’s balance would remain essentially at zero.

The amount of Social Security taxes paid by various groups of people differs, as do the benefits that different groups receive. For example, people with higher earnings pay more in Social Security payroll taxes than do lower-earning participants, and they also receive benefits that are larger. Because Social Security’s benefit formula is progressive, replacement rates—annual benefits as a percentage of past earnings—are lower, on average, for workers who have had higher earnings. As another example, CBO projects that people who were born in more recent decades will pay more in taxes and receive more in benefits because they typically will earn more over a lifetime, even after an adjustment for inflation.

From CBO Summary report 12-16-15


Categories: Social Security

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3 replies »

  1. Good Morning, and Merry Christmas. Can you comment on the proposed bill HR4071 and give us updates on the possible passing of this Bill? I notice they are proposing selling buildings that the Fed government isn’t using to pay for  both Veterans and Senior’s “deserved” COLA. So stated, this is only the 3rd time in 40 years that Seniors have gone without a COLA. The proposed Bill would help, can you research it and give up updates.I sure would appreciate it

    From: quinnscommentary To: Sent: Monday, December 21, 2015 3:47 AM Subject: [New post] Updated Social Security projections – Congressional Budget Office #yiv9917594158 a:hover {color:red;}#yiv9917594158 a {text-decoration:none;color:#0088cc;}#yiv9917594158 a.yiv9917594158primaryactionlink:link, #yiv9917594158 a.yiv9917594158primaryactionlink:visited {background-color:#2585B2;color:#fff;}#yiv9917594158 a.yiv9917594158primaryactionlink:hover, #yiv9917594158 a.yiv9917594158primaryactionlink:active {background-color:#11729E;color:#fff;}#yiv9917594158 | rdquinn posted: “The outlook for Social Security is not improving and yet Congress does nothing and politicians talk nonsense – Sanders wants to improve benefits while in only thirteen years the trust funds will be exhausted. Every month that goes by makes solving the pro” | |


    • This bill has no co-sponsors and sounds like a bad idea in any case. There is no way they could sell enough real estate to pay for a COLA that continues year after year. To give all Americans a1% COLA for just ONE YEAR would cost eight billion seven hundred million dollars. Introducing such legislation tells you how dumb members of Congress can be.


      • Not fixing Social Security shows how dumb Congress and the President can be. It is going to take raising the payroll tax by the rate of inflation and reducing the growth of benefits to no more than the rate of inflation, so we need to do it today, not tomorrow. If it was done in 2015, it would have added $52 per $25,000 in tax per worker. Only 5.7 % of workers benefit from the wage cap, so at some point Congress will end it. moving it to $250,000 would make up 20% of the projected benefit shortfall even with increased payments to the richer retirees. Of course the increases in the payroll tax could be frozen 10 to 15 years out, once the short fall is made up. Also, most know that they will receive way more in SS benefits than they paid in taxes. So to help make up the shortage I am not against taxing Social Security benefits 100% for families with income above $30,000. That would be $150.00 a year for me and I believe I could pay it without any problem. But you may want to adjust it for people living in high cost of living areas, like NY City.

        If Congress and the President do nothing, reducing benefits will not be a good thing. Also, making up the shortage by using general tax revenues or borrowing the money will only add to the interest payments on the debt. Not a good choice if interest rates go up 3-4% or more.


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