Monday, May 16, 2005
Long Term Projections for Social Security
Congressional Budget Office (CBO)
Updated Long-Term Projections for Social Security [31 January 2005]http://www.cbo.gov/ftpdocs/60xx/doc6064/01-31-Long-Term_Projections.pdf[full-text, 10 pages]
The Congressional Budget Office most recently released long-term (100-year) Social Securityprojections in The Outlook for Social Security (June 2004). As a result of both economic andtechnical revisions, those projections have changed slightly. The attached tables and figures present theupdated projections. The Outlook for Social Security presented ranges of uncertainty around thecentral projections; those estimates will also be updated and will be posted in the near future.CBO presents future Social Security benefits under two scenarios. In one scenario, outlays include thefull benefits owed. This is the "scheduled benefits" scenario. In the second analysis, outlays include onlythose benefits that the Social Security Administration has legal authority to pay under current law. Thus,that scenario assumes that all benefits are reduced annually once the trust funds are exhausted so thattotal outlays equal available revenues. In the June report, that was described as the "trust-fundfinanced"scenario. This is now labeled "current law."
CBO projects that under current law Social Security outlays will first exceed revenues from payrolltaxes and taxation of benefits in 2020 and that the program will exhaust the trust funds in 2052. Afterthe trust funds are exhausted, Social Security spending cannot exceed annual revenues. As aconsequence, because dedicated revenues are projected to equal 78 percent of scheduled outlays in2053, CBO finds that the benefits paid will be 22 percent lower than the scheduled benefits.
Since the last estimates were released, CBO has updated its economic and budget forecast for the next10 years (see The Budget and Economic Outlook: Fiscal Years 2006 to 2015), incorporatedupdated Social Security earnings records, and refined the method used to estimate retroactive disabilitypayments. While the major long-term economic assumptions did not change, there were small revisionsin the estimated historical values and projected values of hours worked in the economy, as well as theprojected differential growth in two measures of prices: the price index for gross domestic product(GDP) and the consumer price index.CBO projects that, over the next 10 years, Social Security outlays will average about 0.2 percentagepoints lower relative to GDP than was projected last summer, primarily because of an increase inprojected GDP. The difference diminishes over the following decade, and
CBO projects that, for 2030to 2050, outlays will average 0.1 percentage points higher as a percent of GDP than projected lastsummer. Projected outlays for later years are essentially unchanged.
CBO revised its projection of Social Security revenues relative to GDP down slightly. By the end ofthe 100-year projection period, CBO projects, revenues will be 4.7 percent of GDP, 0.1 percentagepoint lower than projected last summer.
News Source: Institute for Workplance Sudies, Cornell University
Updated Long-Term Projections for Social Security [31 January 2005]http://www.cbo.gov/ftpdocs/60xx/doc6064/01-31-Long-Term_Projections.pdf[full-text, 10 pages]
The Congressional Budget Office most recently released long-term (100-year) Social Securityprojections in The Outlook for Social Security (June 2004). As a result of both economic andtechnical revisions, those projections have changed slightly. The attached tables and figures present theupdated projections. The Outlook for Social Security presented ranges of uncertainty around thecentral projections; those estimates will also be updated and will be posted in the near future.CBO presents future Social Security benefits under two scenarios. In one scenario, outlays include thefull benefits owed. This is the "scheduled benefits" scenario. In the second analysis, outlays include onlythose benefits that the Social Security Administration has legal authority to pay under current law. Thus,that scenario assumes that all benefits are reduced annually once the trust funds are exhausted so thattotal outlays equal available revenues. In the June report, that was described as the "trust-fundfinanced"scenario. This is now labeled "current law."
CBO projects that under current law Social Security outlays will first exceed revenues from payrolltaxes and taxation of benefits in 2020 and that the program will exhaust the trust funds in 2052. Afterthe trust funds are exhausted, Social Security spending cannot exceed annual revenues. As aconsequence, because dedicated revenues are projected to equal 78 percent of scheduled outlays in2053, CBO finds that the benefits paid will be 22 percent lower than the scheduled benefits.
Since the last estimates were released, CBO has updated its economic and budget forecast for the next10 years (see The Budget and Economic Outlook: Fiscal Years 2006 to 2015), incorporatedupdated Social Security earnings records, and refined the method used to estimate retroactive disabilitypayments. While the major long-term economic assumptions did not change, there were small revisionsin the estimated historical values and projected values of hours worked in the economy, as well as theprojected differential growth in two measures of prices: the price index for gross domestic product(GDP) and the consumer price index.CBO projects that, over the next 10 years, Social Security outlays will average about 0.2 percentagepoints lower relative to GDP than was projected last summer, primarily because of an increase inprojected GDP. The difference diminishes over the following decade, and
CBO projects that, for 2030to 2050, outlays will average 0.1 percentage points higher as a percent of GDP than projected lastsummer. Projected outlays for later years are essentially unchanged.
CBO revised its projection of Social Security revenues relative to GDP down slightly. By the end ofthe 100-year projection period, CBO projects, revenues will be 4.7 percent of GDP, 0.1 percentagepoint lower than projected last summer.
News Source: Institute for Workplance Sudies, Cornell University
# posted by Digital Library Sphere @ 2:11 PM 
