Good News, Bad News on Social Security
April 4, 2000
The short-term good news in the just-released annual Social Security Trustees' report is offset by worsening long-term bad news, say experts.
The good news is that the trustees estimate the program will not begin running annual deficits until 2015, compared with the 2014 estimate in last year's report. They also estimate that the trust fund will accumulate enough government bonds to pay Social Security Old Age and Survivors and Disability Insurance (OASDI) benefits through 2037 -- assuming, of course, that future lawmakers are willing to redeem those IOUs by raising taxes, cutting benefits or issuing new debt.
- The bad news is that the inflation-adjusted cumulative deficit between 2015 and 2075 is now projected to be $21.6 trillion, up nearly 7 percent from last year's projection.
- Even after adjusting for inflation, annual deficits will reach $100 billion in 2021, $200 billion in 2026, and $300 billion in 2034.
- And to pay promised benefits, the OASDI payroll tax rate eventually would need to climb to 18.6 percentage points -- 49.8 percent higher than the current level.
Alternatively, benefits would have to be cut by 32 percent to keep the system in balance during the next 75 years.
Source: Daniel J. Mitchell, "Social Security's Trustees' Report Shows Bigger Long-Run Deficit," Executive Memorandum No. 666, April 4, 2000, Heritage Foundation, 214 Massachusetts Avenue, N.E., Washington, D.C. 20002, (202) 546-4400.
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