Social Security Trustees Assumptions Still More Pessimistic than CBO

April 23, 2007 (Social Security Byte)

Social Security Trustees Assumptions Still More Pessimistic than CBO

Social Security Byte by Dean Baker

For Immediate Release: April 23, 2007

Contact: Lynn Erskine, 202-293-5380 x115

Upward redistribution due to trade policy has negatively affected Social Security. 

President Bush’s Social Security trustees (four of the six trustees are political appointees of the president) extended the time period for which the Social Security program is projected to be able to pay full benefits with no changes to 2041 in the 2007 Social Security trustees report issued today, one year later than in the 2006 Report.

The new projections show that after the trust fund is projected to be depleted, the program will be able to pay an average wage earner a benefit that is approximately 2 percent higher in real terms than an average wage earner would who retired in 2007 would receive.

The trustees report that annual benefits are projected to first exceed tax revenue in 2017. While proponents of cutting Social Security often highlight this date, it actually has no importance for the program whatsoever. Under the law, the program can pay full benefits as long as it has money in the trust fund (2041 in this report). The reason for accumulating a large surplus (through a regressive payroll tax) was precisely to defray the cost of paying benefits when the baby boomers retired. Medicare has intermittently drawn on its trust fund to meet its annual benefit payments over the last decade. This has never been raised as an important issue. There is no reason that drawing on the Social Security trust fund should be an issue either.