CBO Director: Testimony on Social Security’s Finances, July 12,2023

CBO’s Director, Phillip Swagel, testifies about the agency’s projections of Social Security’s finances before the Senate Budget Committee.

Established in 1974, The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government.  It is charged with providing  members of Congress  objective  analysis of budgeting and economic issues to support the congressional budget process. Each year, CBO economists and budget analysts produce dozens of reports and hundreds of cost estimates for proposed legislation. This posting includes a summary of Director Swagel’s testimony, a link to the full text of the testimony, and a list of publications that relate to the testimony.

Summary:

Social Security faces a significant financial challenge in the coming decade. Its two components, Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI), are financed by revenues from payroll taxes and income taxes on benefits that are credited to separate trust funds. But those revenues are not sufficient to cover the benefits that are due under those programs.

•  In the Congressional Budget Office’s projections, the OASI trust fund is exhausted in fiscal year 2032, when its balance reaches zero. The DI trust fund is exhausted in 2052. If the two trust funds were combined, they would be exhausted in fiscal year 2033.
• Such long-term projections are uncertain. Demographic factors are one key source of that uncertainty. Economic growth is another, particularly in projecting trust fund exhaustion. If the economy grew more quickly than projected, annual revenues would be greater and the trust funds would be exhausted later than projected. If the economy grew more slowly than projected, the opposite would occur.

CBO produces long-term projections for Social Security under two scenarios, which differ in the concepts used to estimate benefits after the projected exhaustion of the trust funds:

• Scheduled benefits—benefit amounts are paid as scheduled under current law, regardless of whether balances in the program’s trust funds are sufficient to cover those payments.
• Payable benefits—total benefit amounts are limited to annual revenues from payroll taxes and income taxes on benefits after the combined trust funds are exhausted.

View Testimony

Related Publications:

• CBO’s 2023 Long-Term Projections for Social Security
  June 29, 2023
• Testimony on Social Security’s Finances
  April 26, 2023
• CBO Explains How It Develops the Budget Baseline
  April 18, 2023
• The Foreign-Born Population, the U.S. Economy, and the Federal Budget
  April 5, 2023
• The Demographic Outlook: 2023 to 2053
  January 24, 2023
• Options for Reducing the Deficit, 2023 to 2032–Volume I: Larger Reductions
  December 7, 2022
• Options for Reducing the Deficit, 2023 to 2032–Volume II: Smaller Reductions
  December 7, 2022
• How Changing Social Security Could Affect Beneficiaries and the System’s Finances
  April 24, 2019
• An Overview of CBOLT: The Congressional Budget Office Long-Term Model
  April 17, 2018
• Social Security Policy Options, 2015
  December 15, 2015