New CBO Report: Social Security crisis coming to an economy near you!
The Congressional Budget Office released today its new annual Budget Outlook, this time covering fiscal years 2006 to 2015. Take a look on page 23 -- and you'll find the picture of Dorian Gray. This is the illusion-free reality of when the Social Security "crisis" actually begins to unfold.
According to CBO, the crisis starts in 2012 -- the first year that surpluses in Social Security tax receipts above Social Security payments start to decline. Right as the 2012 inflection point is passed, the decline is small and gradual -- but it will accelerate violently through the middle of this century as the surplus first falls to zero, and then goes strongly negative as the Social Security trust funds are drawn down. Here's the discussion accompanying the chart:
Although the budgetary impact of the aging of the babyboom generation will not be fully felt during the current projection period, CBO’s baseline provides initial indications of the coming budgetary pressures. Charting the differences over the next 10 years between projected receipts and outlays for the Social Security trust funds (excluding intragovernmental interest payments) illustrates those pressures. Receipts are projected to exceed expenditures in each year of the period, but under current policies, the amount by which they do so will decline from more than $100 billion between 2008 and 2013 to about $85 billion in 2015 (see Figure 1-6). At that point, Social Security outlays will be growing by about 6 percent per year, but noninterest receipts will be growing by about 4.5 percent. Thus, in CBO’s baseline projections, the capacity of the Social Security trust funds to offset some of the net deficit in the rest of the budget—as they do now—will begin to dwindle during the coming decade. Shortly thereafter, Social Security is projected to begin adding to deficits or reducing surpluses.
This is a complete affirmation of what I wrote in a National Review
Online column several weeks ago (see
"The
C-Word: Say It!" January 11, 2005). Note that in that column I had said the
inflection point would be 2009 -- that was based on the slightly
more pessimistic
projections of the Trustees of the Social Security Trust Funds. But 2009,
2012, who's counting? The crisis is real, and it's on its way.
Posted by Don Luskin on January 25, 2005 12:38 PM to Social Security Choice