Wednesday, July 13, 2016

U.S. Social Security Administration Admits That Their Reserves Will Be Depleted By 2034

In case you missed this last month, The U.S. Social Security Administration admits in their official report that that their reserves will be depleted By 2034 and that scheduled tax income is projected to be sufficient to pay only 75% of benefits thereafter, until 2090.
Here are relevant excerpts from the extensive 272 page report:
[Related: Social Security Administration To Rely On "Other-Than-Legal Immigration" To Take Up Slack & Pay For Baby Boomer's Benefit Checks - What happens when a criminal government fleeces the people for their entire lives by forcing them to pay into a mandatory 'social security' program yet then spends all the money that was slated for those benefits? Why, they rely on a younger host of illegal aliens- excuse me, "other-than-legal immigration," as they politely put it, to take up the slack in future generations. Here is what the Social Security Administration says about immigration in their official 272-page '2016 OASDI Trustees Report.' OASDI stands for old age, survivor and disability insurance, which is more commonly referred to as Social Security.]
Also be sure to see this, from WhatReallyHappened.com: FLASHBACK - BILL CLINTON LOOTED SOCIAL SECURITY TO CREATE HIS FEDERAL BUDGET SURPLUS
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Social Security
The Social Security program provides workers and their families with retirement, disability, and survivors insurance benefits. Workers earn these benefits by paying into the system during their working years. Over the program's 80-year history, it has collected roughly $19.0 trillion and paid out $16.1 trillion, leaving asset reserves of more than $2.8 trillion at the end of 2015 in its two trust funds.
The Bipartisan Budget Act of 2015 was projected to postpone the depletion of Social Security Disability Insurance (DI) Trust Fund by six years, to 2022 from 2016, largely by temporarily reallocating a portion of the payroll tax rate from the Old Age and Survivors Insurance (OASI) Trust Fund to the DI Trust Fund. The effect of updated programmatic, demographic and economic data extends the DI Trust Fund reserve depletion date by an additional year, to the third quarter of 2023, in this year's report. While legislation is needed to address all of Social Security's financial imbalances, the need remains most pressing with respect to the program's disability insurance component.
The OASI and DI trust funds are by law separate entities. However, to summarize overall Social Security finances, the Trustees have traditionally emphasized the financial status of the hypothetical combined trust funds for OASI and DI. The combined funds satisfy the Trustees' test of short-range (ten-year) close actuarial balance. The Trustees project that the combined fund asset reserves at the beginning of each year will exceed that year's projected cost through 2028. However, the funds fail the test of long-range close actuarial balance.
The Trustees project that the combined trust funds will be depleted in 2034, the same year projected in last year's report. The projected 75-year actuarial deficit for the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds is 2.66 percent of taxable payroll, down from 2.68 percent projected in last year's report. This deficit amounts to 1.0 percent of GDP over the 75-year time period, or 20 percent of program non-interest income or 16 percent of program cost.
After 2019, interest income and redemption of trust fund asset reserves from the General Fund of the Treasury will provide the resources needed to offset Social Security's annual deficits until 2034, when the reserves will be depleted. Thereafter, scheduled tax income is projected to be sufficient to pay about three-quarters of scheduled benefits through the end of the projection period in 2090. The ratio of reserves to one year's projected cost (the combined trust fund ratio) peaked in 2008, declined through 2015, and is expected to decline steadily until the trust funds are depleted in 2034.

In 2015, Social Security's reserves increased by $23 billion to $2.8 trillion by the end of the year. The Bipartisan Budget Act of 2015, signed into law on November 2, 2015, averted a near-term shortfall in Social Security's Disability Insurance (DI) Trust Fund. The temporary reallocation of tax rates from the Old-Age and Survivors Insurance (OASI) fund to the DI fund means that DI will be able to pay full benefits until 2023. OASI is able to pay full benefits until 2035, and the combined OASDI funds 1 until 2034, both unchanged from last year.
Each of these trust funds' operations will contribute increasing amounts to Federal unified budget deficits in future years as trust fund bonds are redeemed. Until 2028, interest earnings and asset redemptions, financed from general revenues, will cover the shortfall of HI tax and premium revenues relative to expenditures. In addition, general revenues must cover similar payments as a result of growing OASDI bond redemption and interest payments through 2034 as the trust fund is drawn down.
DI Trust Fund reserves will increase until 2019 and then fall steadily until they are fully depleted in 2023. Payment of full DI benefits beyond 2023, when tax income would cover only 89 percent of scheduled benefits, will require legislation to address the financial imbalance.
The OASI Trust Fund, when considered separately, has a projected reserve depletion date of 2035, the same as in last year's report. At that time, income would be sufficient to pay 77 percent of scheduled OASI benefits.
The combined OASDI trust funds have a projected depletion date of 2034, the same as in last year's report. After the depletion of reserves, continuing tax income would be sufficient to pay 79 percent of scheduled benefits in 2034 and 74 percent in 2090.
The OASDI reserves are projected to grow in 2016 because total income ($944.6 billion) will exceed total cost ($928.9 billion). This year's report indicates that annual OASDI income, including payments of interest to the trust funds from the General Fund, will continue to exceed annual cost every year until 2020, increasing the nominal value of combined OASDI trust fund asset reserves. Social Security's cost is projected to exceed its non-interest income by $73 billion in 2016, and annual non-interest income deficits will persist through 2090. The trust fund ratio (the ratio of projected reserves to annual cost) will continue to decline gradually (Chart E), as it has since 2008, despite this nominal balance increase. Beginning in 2020, net redemptions of trust fund asset reserves with General Fund payments will be required until projected depletion of these reserves in 2034.
How Are Social Security and Medicare Financed? For OASDI and HI, the major source of financing is payroll taxes on earnings paid by employees and their employers. Self-employed workers pay the equivalent of the combined employer and employee tax rates. During 2015, an estimated 168.9 million people had earnings covered by Social Security and paid payroll taxes; for Medicare the corresponding figure was 172.7 million. Current law establishes payroll tax rates for OASDI, which apply to earnings up to an annual maximum ($118,500 in 2016) that ordinarily increases with the growth in the nationwide average wage. When the cost-of-living adjustment (COLA) for December of any year is zero, as occurred in 2015, the maximum taxable earnings amount does not increase for the following year. In contrast to OASDI, covered workers pay HI taxes on total earnings. ...
Who Are the Trustees? There are six Trustees, four of whom serve by virtue of their positions in the Federal Government: the Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services, and the Commissioner of Social Security. The other two Trustees are public representatives appointed by the President, subject to confirmation by the Senate. The two Public Trustee positions are currently vacant.
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