The Congressional Budget Office reiterates warnings about Social Security’s long-term finances in a new report that illustrates the need for substantial reforms in the largest single program in the federal budget.
About 60 million people currently receive Social Security benefits through the program’s retirement and disability components. The aging of the population, however, means the government must spend more each year just to provide the same level of benefits to more retirees and others.
Since 2010, CBO notes, annual spending for Social Security has exceeded annual revenues (excluding interest) that are credited to its two trust funds. Absent legislative changes, the budget office projects that gap will widen from the current 9 percent to almost 30 percent in 2025 and more than 40 percent in 2040.
CBO projects the combined Social Security trust funds would be exhausted in 2029. In that case, under current law, full benefits could no longer be paid. Every year the Social Security trustees warn that the program is on an unsustainable track, although their report last summer estimated that the combined trust funds would not be exhausted until 2034.
Congress passed legislation this fall to prevent the exhaustion of the Disability Insurance trust fund next year. But that involved shifting money from its other trust fund, which is obviously not a long-term solution.
Over the next 75 years, CBO projects, Social Security’s cost rate relative to taxable payroll will be about 2 percent higher than last year’s projection.
External links:
2015 Long-Term Projections for Social Security (CBO)
Social Security Policy Options (CBO)
Trustees’ Reports Show Mounting Pressure on Federal Budget from Medicare, Social Security (Concord Coalition)
