Social Security's Office of Chief Actuary releases annual projections for the future status of the Old Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds, called the trustees report. The 2020 report projects that the OASI Trust Fund will lack funds to pay full benefits in 2034 and the DI Trust Fund in 2065.
The trustees report is the one that people pay the most attention to but it's not the only one. The Congressional Budget Office (CBO) produces its own projections. That report has just been issued. It shows that the OASI Trust Fund will lack funds to pay full benefits in 2031 and the DI Trust Fund in 2026.
The difference between the OASI projections (2034 versus 2031) is significant but the difference in the DI projections (2065 versus 2026) is eye popping. The difference in the OASI projections are probably due to different economic assumptions. The CBO had the benefit of knowing about the Covid-19 pandemic. There's no easy explanation for the difference in the DI projections. The CBO report doesn't attempt to explain the difference other than saying:
CBO had previously projected that the DI trust fund would be solvent through the end of the 10-year projection period. The earlier exhaustion date currently projected is largely the result of CBO’s projections of lower payroll tax revenues and higher spending on benefits in the next few year.
4 comments:
Sounds like the CBO is projecting a significant decrease in payroll tax revenue coupled with a significant increase in disability claims, both of which seem extremely likely given our utter failure to take adequate steps toward controlling the pandemic and addressing its toll on the working class.
On the upside, when starts panning out, perhaps the masses will finally reach the painfully obvious conclusion that cutting taxes for the rich isn't actually a viable strategy for funding the government. Probably not, though.
If it doesn't tell them so on a Jerry Springer-esque reality TV show, Youtube, or social media, most of the masses will remain absolutely clueless.
In the trustees projections, the DI exhaustion date is far in the future but the reserves are relatively small. So a relatively small change can have large effects on the trajectory of the trust fund reserves. By contrast, the OASI trust fund reserves are large and decumulate rapidly. DI is like a glider flying 1000 feet off the ground. The OASI trust fund is at 30,000 feet but coming in for a landing no matter what when it is out of fuel.
The trustees incorporated no information from the COVID recession. CBO incorporates everything we know now and what we expect for the future. Next year's trustees report will not be that different from CBO's.
The ceiling on wages that can taxed for social security purposes must be raised.
Disability claims are not being paid out at a faster rate. Given the difficulties with contacting social security now, it's harder for some to apply.
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