CBO Reviews Social Security Balance Sheet

August 6th, 2011
in econ_news

Econintersect: Congressional Budget Office (CBO) in its annual update to its long term social security projections shows the Disability Insurance (DI) trust fund will be exhausted in 2017 and that the Old Age and Survivors Insurance (OASI) trust fund will be exhausted in 2040.  Disability Insurance is 19% of social security program expenditures.

Once a trust fund’s balance has fallen to zero and current revenues are insufficient to cover the benefits that are specified in law, the corresponding program will be unable to pay full benefits without changes in law.

Follow up:

The CBO noted:

In calendar year 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 trust funds. CBO projects that the gap will continue: Over the next five years, outlays will be about 5 percent greater than such revenues. However, as more members of the baby-boom generation (that is, people born between 1946 and 1964) enter retirement, outlays will increase relative to the size of the economy, whereas tax revenues will remain at an almost constant share of the economy. As a result, the shortfall will begin to grow around 2017.


Source:  CBO


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1 comment

  1. Alan Harvey says :

    In all the talk, little is mentioned of the trust funds, which are making up the shortfall for years into the future. These are bondholders writ large, and these like others, are suffering from the zero percent policy of the Fed and the backdoor bailouts of the banks.

    Also note that over the past 15 years, people have migrated to disability on account of poor job prospects.

    But at a minimum, the attack on the retirement portion of social security has likely reduced spending from households who are hoarding against uncertainty.

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