Long-range deficits remain as issue
for long-term solvency of Social Security
The Social Security Board of Trustees today declared that the Social
Security program continues to be substantially underfinanced for the
long term, while extending the projected solvency of the trust funds by
three years.
In the 2002 Annual Report to Congress, the Trustees announced:
-- The projected point at which tax revenues will fall below program
costs comes in 2017 -- one year later than the estimate in last year's
report;
-- The projected point at which program costs exceed tax revenues plus
interest from the trust funds comes in 2027 -- two years later than the
estimate in last year's report;
-- The projected point at which the trust funds will be exhausted comes
in 2041 -- three years later than the estimate in last year's report;
-- The projected actuarial deficit of taxable payroll over the 75-year
long-range period is 1.87 percent -- slightly larger than the 1.86
percent projected in last year's report.
"These projections suggest that we have not lost ground in the past
year," said Jo Anne Barnhart, Commissioner of Social Security.
"However, the report still projects that, once the trust funds are
exhausted, payroll tax revenues will be sufficient to meet only 73% of
Social Security benefit obligations under current law. And projections
for the late 21st century
paint an even bleaker picture.
"The message of this report is clear," Commissioner Barnhart
said. "In order to create a sound and sustainable future, long-term
trust fund deficits should be addressed in a timely way to allow a
gradual phasing in of any necessary changes, and so workers can adjust
their plans accordingly.
"The President has put forth six principles to guide our search for
a way to ensure that Social Security remains secure through the entire
21st century.
Under these principles, current and near retirees can be assured that
their benefits will not be adversely affected; and the 153 million
workers covered by Social Security this year can be confident that
retirement benefits under the program will be reformed and made secure
and the disability and
survivors benefit components will be preserved.
"I am convinced that the current period of national debate and
discussion can yield a bipartisan plan that will ensure that Social
Security will continue to play its essential role for today's retirees
and other beneficiaries, workers, their children and grandchildren. But,
as the report issued today makes clear, we cannot postpone our
task."
Other highlights of the Trustees Report include:
-- The Old-Age and Survivors, and Disability Insurance Trust Funds paid
benefits of approximately $432 billion in calendar year 2001;
-- There were 46 million beneficiaries on the rolls at the end of 2001;
-- Income to the combined Trust Funds amounted to $602 billion in 2001
and expenditures were $439 billion, increasing the assets of the
combined funds by $163 billion to $1.21 trillion at the end of 2001;
-- The cost of $3.7 billion to administer the program continues to be a
very low 0.6 percent of total income;
-- Interest earned on the invested assets of the combined Trust Funds
was $72.9 billion in 2001.
Based upon the most recent experience and updated methodologies, the
Trustees made several changes in assumptions from last year's report.
The shorter-term outlook was improved primarily because of higher
assumed productivity growth and revenue from taxes paid on Social
Security income.
The longer-term deterioration in outlook resulted from the passage of
another year, a lower death rate assumption and projected higher
benefits on average. The combination means that at the end of the
75-year period the program is in a significantly worse position than
projected in last year's
report.
The Board of Trustees is comprised of six members. Four serve by virtue
of their positions with the federal government: Paul H. O'Neill,
Secretary of the Treasury and Managing Trustee; Jo Anne Barnhart,
Commissioner of Social Security; Tommy G. Thompson, Secretary of Health
and Human Services; and
Elaine L. Chao, Secretary of Labor. The other two members, appointed by
the President and confirmed by the Senate, are John L. Palmer and Thomas
R. Saving.
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