CBO Projects Social Security Trust Fund (OASDI) Will Be Depleted In 2033: A Depleted Trust Fund Ends Legal Authority To Pay Full Benefits

From CBO, "The 2013 Long-Term Projections for Social Security: Additional Information:"

Social Security is the federal government’s largest single program. Of the 58 million people who currently receive Social Security benefits, about 70 percent are retired workers or their spouses and children, and another 11 percent are survivors of deceased workers; all of those beneficiaries receive payments through Old-Age and Survivors Insurance (OASI). The other 19 percent of beneficiaries are disabled workers or their spouses and children; they receive Disability Insurance (DI) benefits.

In fiscal year 2013, Social Security’s outlays totaled $808 billion, almost one-quarter of federal spending; OASI payments accounted for about 83 percent of those outlays, and DI payments made up about 17 percent. Each year, CBO prepares long-term projections of revenues and outlays for the program. The most recent set of 75-year projections was published in September 2013. This publication (shown below) presents additional information about those projections.

The 2013 Long-Term Projections for Social Security: Additional Information from Congressional Budget Office

Social Security has two primary sources of tax revenues: payroll taxes and income taxes on benefits. Roughly 96 percent of those revenues derive from a payroll tax—generally, 12.4 percent of earnings—that is split evenly between workers and their employers; self-employed people pay the entire tax. The payroll tax applies only to taxable earnings—earnings up to a maximum annual amount ($113,700 in 2013). The remaining share of tax revenues—4 percent—is collected from income taxes that higher-income beneficiaries pay on their benefits. Revenues credited to the program totaled $745 billion in fiscal year 2013.***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 tax revenues (that is, outlays exceeded total revenues excluding interest credited to the trust funds). In 2012, outlays exceeded noninterest income by about 7 percent, and CBO projects that the gap will average about 12 percent of tax revenues over the next decade. As more members of the baby-boom generation retire, 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 gap will grow larger in the 2020s and will exceed 30 percent of revenues by 2030.

CBO projects that under current law, the DI trust fund will be exhausted in fiscal year 2017, and the OASI trust fund will be exhausted in 2033. If a trust fund’s balance fell to zero and current revenues were insufficient to cover the benefits specified in law, the Social Security Administration would no longer have legal authority to pay full benefits when they were due. In 1994, legislation redirected revenues from the OASI trust fund to prevent the imminent exhaustion of the DI trust fund. In part because of that experience, it is a common analytical convention to consider the DI and OASI trust funds as combined. Thus, CBO projects, if some future legislation shifted resources from the OASI trust fund to the DI trust fund, the combined OASDI trust funds would be exhausted in 2031. [Emphasis added.]