Social Security disability, rewind
April 24, 2012 2 Comments
The 2012 Social Security Trustees report estimates the year at which benefits will outpace Social Security (OASDI) payroll tax receipts plus spending authority granted by IOUs (from when more payroll taxes flowed in than benefits were paid out), and the program will no longer able to pay full benefits as 2033.
However, under current law, the disability portion (DI) of Social Security and the old-age retirement portions (OASI) are separate and always have been. The date of 2033 reported in the media and shown below under OASDI, assumes that Congress will pass a law allowing the mingling of funds from the old age (OASI) and disability (DI) portions of Social Security to pay for the disability shortfall, that will come about in 2016.
As a stand alone program, the old age portion of Social Security can pay full benefits through 2035. Assuming the parts of the program are going to be co-mingled (which has always been assumed) puts the year when the combined program could no longer pay full benefits without changes at 2033. The shortfall facing the disability portion of Social Security is much smaller (stated as percent of taxable payroll [and not GDP], 0.37 v. 2.30) than is the one facing the old age retirement portion.
At some point, Congress will actually have to do some of these things that have always been assumed to be straightforward. I wrote nearly the same post about 11 months ago. Also, keep in mind that the long range financing of Medicare is set to move away from payroll taxes, and therefore trust fund accounting, and toward income taxes, by default.
PS: I apologize for the quality of tables. Taken from pdfs in a manner that usually has higher quality.