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1 1 (April 28, 2020)

handle is hein.crs/govdabn0001 and id is 1 raw text is: -c r s c n ...........~ April 28, 2020 Social Security: Selected Findings of the 2020 Annual Report According to the recent report of the Board of Trustees of the Social Security Trust Funds, the program's finances are in a similar position in 2020 as in 2019. The combined date of projected Trust Fund asset depletion is unchanged after which the percentage of benefits payable is relatively the same. The 2020 annual report reflects the Board of Trustees' understanding of the OASDI program at the start of 2020; thus, it does not include potential effects of the Coronavirus Disease 2019 (COVID-19). -, ,ci, S e --u r ty 0 ve r Nkw Social Security is a self-financing program that in 2019 covered approximately 178 million workers and provided monthly cash benefits to over 64 million beneficiaries. It is the federal government's largest program, in terms of both the number of people affected (i.e., covered workers and beneficiaries) and its finances. Social Security is composed of Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI), referred to collectively as OASDI. The OASDI program is primarily financed (89.0% of total revenues in 2019) through a payroll tax applied to Social Security covered earnings up to an annual limit. In addition, some beneficiaries pay income tax on a portion of their Social Security benefits, accounting for 3.4% of total revenue in 2019. From 1983 to 2009, the OASDI program collected more in tax revenues than needed to pay benefits. Excess revenues are held in interest-bearing U.S. Treasury securities, providing a third source of funding for the program. In 2019, interest revenues accounted for 7.6% of total revenues. Monthly benefits are the largest OASDI program cost, accounting for 98.9% of total costs in 2019. Administrative and other costs accounted for the remainder. Both the OASI and DI programs operate with a trust fund financing mechanism. Monies credited to these trust funds are earmarked for paying Social Security benefits and certain administrative costs. Using a trust fund allows the OASI and DI programs to track their respective programs revenues and costs and to hold any accumulated assets from years when revenues exceed costs. The OASI Trust Fund and DI Trust Fund are legally distinct entities; they are discussed here collectively as the OASDI Trust Funds, or the trust funds. A Board of Trustees manages the trust funds. The trustees are required to report to Congress annually on the trust funds' status and financial operations. In general, the trust funds' solvency-the ability to pay full benefits scheduled under current law on a timely basis-indicates their status. If assets held in the trust funds were to be depleted, the OASDI program could pay out in benefits only what it receives in revenues. Table 1 shows the trust funds' key dates under the trustee's intermediate assumptions, which reflect their best estimate of future economic, demographic, and program-specific factors. Table I. Key Dates Projected for the Social Security Trust Funds in the 2019 and 2020 Trustees Reports (under the trustees' intermediate assumptions) 2019 Report 2020 Report OASI DI OASDI OASI DI OASDI Cost exceeds noninterest 2010 2036 2010 2010 2041 2010 revenues Cost exceeds total 2020 2041 2020 2021 2047 2021 revenues Trust fund reserves 2034 2052 2035 2034 2065 2035 depleted Source: CRS, based on the 2019 and 2020 OASDI Trustees Report. In the 2020 annual report, as compared with the 2019 report, the trustees project an unchanged date of 2035 for OASI Trust Fund reserve depletion and a noticeably changed date of 2052 to 2065 for DI Trust Fund reserve depletion. The trustees attribute this change to lower-than- anticipated disability applications and benefit awards. As stated in the 2020 report, The substantial decline in applications from 2010 to the level for 2018 and 2019, and the resulting declines in the number of disabled worker beneficiaries since 2013, have caused the annual cost of the DI program to become much closer to annual income, making the DI Trust Fund reserve depletion date very sensitive to small changes in income and cost. In the 2019 report, as shown in Table 2, the trustees projected the trust funds' overall balance (i.e., the total amount of accumulated asset reserves) would increase slightly. Asset reserves held in the trust funds increased more than expected during 2019, owing to larger-than- projected revenues and lower-than-projected costs. Table 2. Financial Operations for the Social Security Trust Funds in the 2019 and 2020 Trustees Reports (in billions; under the trustees' intermediate assumptions) 2019 2019 2020 (projected) (actual) (projected) Starting Trust Funds' $2,894.9 $2,894.9 $2,897.4 Reserves Total Revenue 1,061.1 1,061.8 1,116.8 Total Costs 1,060.0 1,059.3 1,1 12.0 Change in Trust Funds' 1.0 2.5 4.4 Reserves Wy's C.,, , yg\\ y gmm, Ngm 10N IL11

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