Can This Plan Avert a National Retirement Disaster?
Last Friday, the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds delivered its 2013 annual report to Congress. The report was intended to inform Congress about the current state of the Old-Age, Survivors, and Disability Insurance (“OASDI”) and the Disability Insurance (“DI”) programs, and projects forward to the best of its abilities the health of the programs in the future. These programs fall under the umbrella of Social Security.
The 2013 report confirmed the findings of the 2012 report, and vindicated the position of many policymakers and a majority of the American population. Chiefly: there is a problem facing Social Security. To be dramatic about it, although the language of the report is modest, a crisis is brewing.
At the end of 2012, the OASDI program was providing benefit payments to approximately 57 million people. This group consisted of 40 million retired workers, 6 million survivors of retired workers, 11 million disabled workers, and all of their dependents. Total expenditures for the year were $786 billion.
On the other side of the equation, total income — i.e. taxes collected that are appropriated for the OASDI program — was $840 billion, consisting of $731 billion in non-interest income, and $109 billion in interest earnings. This meant that the program was running at a pre-interest deficit of $169 billion, largely due to a temporary reduction in the Social Security payroll tax in 2011 and 2012 (the program ran a pre-interest deficit in 2011 as well). In 2013, with some more revenue coming in, the program is expected to run a pre-interest deficit of $79 billion.