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Updated Long-Term Projections for Social Security [xii] (January 2005)

handle is hein.congrec/cbo0817 and id is 1 raw text is: Updated Long-Ternm Projections for Social Security ihe Congressional Budget Office most recently released long-tcrm (100-year) Social Security projections in The Outlook for Social Security (June 2004). As a result of both economic and technical revisions, those projections have changed slightly. The attached tables and figures present the updated projections. The Outlook for Social Security presented ranges of uncertainty around the central projections; those estimates will also be updated and will be posted in the near future. CBO presents future Social Security benefits under two scenarios, hi one scenario, outlays include the lull benefits owed. This is the scheduled henefits scenario, In the second analysis, outlays include only those benefits that the Social Security Administration has legal authority to pay under current law. Thus, that scenario assumes that all benefits are reduced annually once the trust funds are exhausted so that total outlays equal available revenues. In the June report, that was described as the trust-fund- financed scenario. This is now labeled current law. CBO projects that under current law Social Security outlays will first exceed revenues from payroll taxes and taxation of benefits in 2020 and that the program will exhaust the trust funds in 2052. After the trust finds are exhausted, Social Security spending catinot exceed annual revenues. As a conscluence, because dedicated revenues are projected to equal 78 percent of scheduled outlays in 2053, CBO finds that the benefits paid will be 22 percent lower than the scheduled benefits. Since the last estimates were released, CBO has updated its economic and budget forecast for the next 10 years (see The Bludget and Economic Outlook: Fiscal Years 2006 to 2015), incorporated updated Social Security earnings records, and refined the method used to estimate retroactive disability payments. While the major long-term economic assumptions did not change, there were small revisions in the estimated historical values and projected values of hours worked in the economy, as well as the projected differential growth in two measures of prices: the price index for gross domestic product (GDP) and the consumer price index. Cl3O projects that, over the next 10 years, Social Security outlays will average about 0.2 percentage points lower relative to GDP than was projected last sunmer, primarily because of'an increase in projected GDP. The difference diminishes over the following decade, and CBO projects that, for 2030 to 2050, outlays will average 0. 1 percentage points higher as a percent of GDP than projecled last sunmuer. Projected outlays fbr later years are essentially unchanged. CBO revised its projection of Social Security revenues relative to GDP down slightly. By the end of the 100-year projection period, CBO projects, revenues will be 4.7 percent of GI)P, 0.1 percentage point lower than projected last summer.

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