CBO Report Excerpt:
According to CBO's projections, if current laws remained in place, spending on the major mandatory health care programs alone would grow from less than 6 percent of GDP today to about 9 percent in 2035 and would continue to increase thereafter. Spending on Social Security is projected to rise much less sharply, from less than 5 percent of GDP today to about 6 percent in 2030, and then to stabilize at roughly that level. Altogether, the aging of the population and the rising cost of health care would cause spending on the major mandatory health care programs and Social Security to grow from roughly 10 percent of GDP today to about 15 percent of GDP 25 years from now. (By comparison, spending on all of the federal government's programs and activities, excluding interest payments on debt, has averaged about 18.5 percent of GDP over the past 40 years.) That combined increase of roughly 5 percentage points for such spending as a share of the economy is equivalent to about $750 billion today. If lawmakers ultimately modified some provisions of current law that might be difficult to sustain for a long period, that increase would be even larger.
This is a link to the full report:
http://www.cbo.gov/ftpdocs/122xx/doc12212/2011_06_22_summary.pdf
Comment:
The problem I have with the CBO report is that it lumps Social Security's cost with the other "Entitlement" programs like Medicare and Medicaid. Even the CBO report notes that what Social Security pays out now in benefits as reported by the 2011 Trustee Report reflected only 5 percent of GDP with it only increasing to a moderate 6 percent of GDP by 2030, but Social Security is fully funded by its own trust funds. In the short term as the OASDI taxes that are currently being collected from employees fall short of required benefit payouts hence the Trust Funds are being drawn upon. So in technical terms Social Security benefits are budget neutral, they cost nothing. The government pays no monies out of its general revenue to pay Social Security benefits. Social Security is required to purchase US Treasury bonds with the tax revenue it receives. It like any other debt holder of US Treasury debt expects to be paid. If Social Security was a Large Private Pension with 2+ Trillion dollars of US Treasury Bonds it would also be "contributing" to the US budget woes. We must keep Social Security solvent by eliminating the tax cap on employee wages. This would eliminate both the long term and short term issues Social Security faces.
According to CBO's projections, if current laws remained in place, spending on the major mandatory health care programs alone would grow from less than 6 percent of GDP today to about 9 percent in 2035 and would continue to increase thereafter. Spending on Social Security is projected to rise much less sharply, from less than 5 percent of GDP today to about 6 percent in 2030, and then to stabilize at roughly that level. Altogether, the aging of the population and the rising cost of health care would cause spending on the major mandatory health care programs and Social Security to grow from roughly 10 percent of GDP today to about 15 percent of GDP 25 years from now. (By comparison, spending on all of the federal government's programs and activities, excluding interest payments on debt, has averaged about 18.5 percent of GDP over the past 40 years.) That combined increase of roughly 5 percentage points for such spending as a share of the economy is equivalent to about $750 billion today. If lawmakers ultimately modified some provisions of current law that might be difficult to sustain for a long period, that increase would be even larger.
This is a link to the full report:
http://www.cbo.gov/ftpdocs/122xx/doc12212/2011_06_22_summary.pdf
Comment:
The problem I have with the CBO report is that it lumps Social Security's cost with the other "Entitlement" programs like Medicare and Medicaid. Even the CBO report notes that what Social Security pays out now in benefits as reported by the 2011 Trustee Report reflected only 5 percent of GDP with it only increasing to a moderate 6 percent of GDP by 2030, but Social Security is fully funded by its own trust funds. In the short term as the OASDI taxes that are currently being collected from employees fall short of required benefit payouts hence the Trust Funds are being drawn upon. So in technical terms Social Security benefits are budget neutral, they cost nothing. The government pays no monies out of its general revenue to pay Social Security benefits. Social Security is required to purchase US Treasury bonds with the tax revenue it receives. It like any other debt holder of US Treasury debt expects to be paid. If Social Security was a Large Private Pension with 2+ Trillion dollars of US Treasury Bonds it would also be "contributing" to the US budget woes. We must keep Social Security solvent by eliminating the tax cap on employee wages. This would eliminate both the long term and short term issues Social Security faces.
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