Thursday, December 22, 2016

CBO Projects A 29 Percent Cut In Social Security Benefits In 2030 When Trust Funds Are Depleted

From Congressional Budget Office, "CBO’s 2016 Long-Term Projections for Social Security: Additional Information" December 21, 2016 Report:
Under current law, CBO projects, Social Security’s trust funds, considered together, will be exhausted in 2029. In that case, benefits in 2030 would need to be reduced by 29 percent from the scheduled amounts.

CBO's Projections Of Social Security Benefits Outlays
Source: CBO
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What Is the Outlook for Social Security Spending and Revenues?
In 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 combined OASDI trust funds. A gap between those amounts has persisted since then, and in fiscal year 2016, total outlays exceeded noninterest income by about 7 percent. As more people in the baby-boom generation retire over the next few decades and as longer life spans lead to longer retirements, that gap will widen, CBO projects. If current laws governing taxes and spending stayed the same and if benefits were paid as scheduled, outlays for the Social Security program would rise from 5.0 percent of gross domestic product (GDP) in 2016 to 5.9 percent in 2026 and to 6.3 percent in 2046; they would exceed tax revenues by 33 percent in 2026 and by 42 percent in 2046.

According to CBO’s projections, without changes in the programs, the balance of the DI trust fund will be exhausted in fiscal year 2022, the balance of the OASI trust fund will be exhausted in calendar year 2030, and the combined balances of the OASDI trust funds will be exhausted in calendar year 2029. If a trust fund’s balance declined to zero and current revenues were insufficient to cover benefits specified in law, the Social Security Administration would no longer be permitted to pay full benefits when they were due. In the years after a trust fund was exhausted, annual outlays would be limited to annual revenues: All receipts to the trust fund would be used, and the trust fund’s balance would remain essentially at zero. [Emphasis added.]

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