Category Archives: Social Security

Social Security Finances: Findings of the 2018 Trustees Report

Source: Elliot Schreur and Benjamin Veghte, National Academy of Social Insurance, June 2018

From the abstract:
The 2018 Report of the Social Security Trustees projects that revenues will be sufficient to pay all scheduled benefits until 2034 and roughly three quarters of scheduled benefits thereafter. In 2017, Social Security income from payroll contributions, tax revenues, and interest on reserves exceeded outgo by $44 billion. Reserves, now at $2.9 trillion, are projected to begin to be drawn down in 2018 in order to pay full scheduled benefits. The Disability Insurance (DI) Trust Fund is projected to cover scheduled benefits until 2032, and the Old-Age and Survivors Insurance (OASI) Trust Fund until 2034.1 On a combined OASDI basis, Social Security is fully funded until 2034, but faces a projected shortfall thereafter. After the projected depletion of the combined OASDI trust funds, Social Security contributions and tax revenues would continue to be received and would cover about 79 percent of scheduled benefits (and administrative costs, which are less than 1 percent of outgo). The long-range actuarial shortfall over 75 years is projected to be 2.84 percent of taxable payroll – that is, 2.84 percent of all earnings that are subject to Social Security contributions. This projected long-term revenue shortfall is substantially unchanged from the 2.83 percent of taxable payroll reported in the 2017 Trustees Report. Timely revenue increases and/or benefit reductions could bring the program into long-term balance, preventing the projected shortfall.

Related:
Social Security 2018 Trustees Report
Source: Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds

Social Security and Saving: An Update

Source: Sita Slavov, Devon Gorry, Aspen Gorry, Frank N. Caliendo, Public Finance Review, First Published May 2, 2018
(subscription required)

From the abstract:
Typical neoclassical life-cycle models predict that Social Security has a large and negative effect on private savings. We review this theoretical literature by constructing a model where individuals face uninsurable longevity risk and differ by wage earnings, while Social Security provides benefits as a life annuity with higher replacement rates for the poor. We use the model to generate numerical examples that confirm the standard result. Using several benefit and tax changes from the 1970s and 1980s as natural experiments, we investigate the empirical relationship between Social Security and private savings and find little evidence to support the predictions from the theoretical model. We explore possible reasons for the lack of strong empirical findings.

The Poverty Reduction of Social Security and Means-Tested Transfers

Source: Bruce D. Meyer, Derek Wu, National Bureau of Economic Research (NBER), NBER Working Paper No. 24567, May 2018
(subscription required)

From the abstract:
Many studies examine the anti-poverty effects of social insurance and means-tested transfers, relying solely on survey data with substantial errors. We improve on past work by linking administrative data from Social Security and five large means-tested transfers (SSI, SNAP, Public Assistance, the EITC, and housing assistance) to 2008-2013 Survey of Income and Program Participation data. Using the linked data, we find that Social Security cuts the poverty rate by a third – more than twice the combined effect of the five means-tested transfers. Among means-tested transfers, the EITC and SNAP are most effective. All programs except for the EITC sharply reduce deep poverty (below 50% of the poverty line), while the impact of the EITC is more pronounced at 150% of the poverty line. For the elderly, Social Security single-handedly slashes poverty by 75%, more than 20 times the combined effect of the means-tested transfers. While single parent families benefit more from the EITC, SNAP, and housing assistance, they are still relatively underserved by the safety net, with the six programs together reducing their poverty rate by only 38%. SSI, Public Assistance, and housing assistance have the highest share of benefits going to the pre-transfer poor, while the EITC has the lowest. Finally, the survey data alone provide fairly accurate estimates for the overall population at the poverty line, although they understate the effects of Social Security, SNAP, and Public Assistance. However, there are more striking differences at other income cutoffs and for specific family types. For example, the survey data yield 1) effects of SNAP and Public Assistance on near poverty that are two-thirds and one-half what the administrative data generate and 2) poverty reduction effects of SSI, Social Security, and Public Assistance that are 34-44% of what the administrative data produce for single parent families.

Related:
New evidence shows that our anti-poverty programs, especially Social Security, work well
Source: Michael Hiltzik, Los Angeles Times, May 7, 2018

Few U.S. government efforts are consistently more vilified than anti-poverty programs. They’re dismissed as ineffective and ridiculed as giveaways to undeserving recipients. A new paper puts the lie to these assertions by showing that the nation’s most important anti-poverty efforts all succeed in serving their goals — in the case of Social Security, spectacularly. The authors, Bruce D. Meyer and Derek Wu of the University of Chicago, used administrative statistics from six major programs to demonstrate that five of the six “sharply reduce deep poverty” (that is, income below 50% of the federal poverty line) and the sixth has a “pronounced” impact among the working poor…..

Why More Than A Million Teachers Can’t Use Social Security

Source: Cory Turner, NPR, All Things Considered, April 20, 2018

Teachers have staged protests in recent weeks in West Virginia, Oklahoma, Kentucky, Colorado and Arizona. Some are fighting lawmakers who want to scale back their pensions.

It’s no secret that many states have badly underfunded their teacher pension plans for decades and now find themselves drowning in debt. But this pensions fight is also complicated by one little-known fact:

More than a million teachers don’t have Social Security to fall back on.

To understand why, we need to go back to Aug. 14, 1935. That is when President Franklin Delano Roosevelt signed the original Social Security Act.

Social Security: The Trust Funds

Source: William R. Morton, Wayne Liou, Congressional Research Service, CRS Report, RL33028, September 12, 2017

…. This report covers how the Social Security program is financed and how the Social Security trust funds work. It will be updated annually to reflect current projections of the financial status of the Social Security trust funds…..

Related:
Social Security: What Would Happen If the Trust Funds Ran Out?
William R. Morton, Wayne Liou, Congressional Research Service, CRS Report, RL33514, September 12, 2017

Social Security Finances: Findings of the 2017 Trustees Report

Source: Elliot Schreur and Benjamin Veghte, National Academy of Social Insurance, Social Security Brief No. 50, July 2017

From the abstract:
In 2016, Social Security income from payroll contributions, tax revenues, and interest on reserves exceeded outgo by $35 billion, leaving a surplus. Reserves, now at $2.8 trillion, are projected to grow to $3.0 trillion by the end of 2021. If Congress takes no action before then, reserves would be drawn down to pay benefits. The Disability Insurance (DI) Trust Fund is projected to cover scheduled benefits until 2028, and the Old-Age and Survivors (OASI) Trust Fund until 2035. On a combined OASDI basis, Social Security is fully funded until 2034, but faces a projected shortfall thereafter. After the projected depletion of the combined OASDI trust funds, Social Security contributions and tax revenues would continue to be received and would cover about 77 percent of scheduled benefits (and administrative costs, which are less than 1 percent of outgo). The long-range actuarial shortfall over 75 years is projected to be 2.83 percent of taxable payroll – that is, 2.83 percent of all earnings that are subject to Social Security contributions. This projected long-term revenue shortfall increased from 2.66 percent of taxable payroll, which was reported in the 2016 Trustees Report. Timely revenue increases and/or benefit reductions could bring the program into long-term balance, preventing the projected shortfall.

Budget of the U.S. Government – Fiscal Year 2018

Source: Office of Management and Budget, May 2017

A New Foundation for American Greatness – President’s Budget FY 2018

Major Savings and Reforms

America First – A Budget Blueprint to Make America Great Again

Analytical Perspectives
Appendix
Historical Tables
Supplemental Materials
Fact Sheets
Supplementals, Amendments, and Releases
Past President’s Budgets

Related:
Greenstein: Trump Budget Proposes Path to a New Gilded Age
Source: Robert Greenstein, Center on Budget and Policy Priorities, CBPP Statement, May 22, 2017

President Trump’s new budget should lay to rest any belief that he’s looking out for the millions of people the economy has left behind.

President Trump’s Budget Includes a $2 Trillion Math Mistake
Source: Ryan Teague Beckwith, Time, May 23, 2017

President Trump’s budget includes simple accounting error that adds up to a $2 trillion oversight.

Trump releases budget hitting his own voters hardest
Source: Andrew Restuccia , Matthew Nussbaum and Sarah Ferris, Politico, Updated: May 23, 2017

The president’s proposal for next year’s federal spending calls for more than $1 trillion in cuts to social programs, including farm aid.

What Trump’s budget cuts from the social safety net
Source: Denise Lu and Kim Soffen, Washington Post, Updated May 23, 2017

On Tuesday, President Trump released his 2018 budget proposal. It makes deep cuts across many anti-poverty programs, slashing food stamps by more than a quarter and children’s health insurance by 19 percent.

Trump budget slashes money for federal lands, needy and health care
Source: Thomas Burr, The Salt Lake Tribune, May 23 2017

President Donald Trump’s proposed 2018 fiscal budget would hit Utah’s needy and disabled, cut block grants to communities, slash funding for public lands and public transit projects and could hurt rural airport services.

How the Trump Budget Undermines Economic Security for Working Families
Source: Rebecca Vallas, Harry Stein, Eliza Schultz, Neil Campbell, Kate Bahn, Regina Willensky, Kevin DeGood, Antoinette Flores, Ethan Gurwitz, Alexandra Thornton, and Angela Hanks, Center for American Progress, May 23, 2017

With an administration chock full of self-serving millionaires and billionaires, it comes as little surprise that President Donald Trump’s proposed budget would be an enormous windfall for the wealthiest Americans. But the degree to which it privileges the 1 percent at the expense of nearly everyone else—breaking Trump’s campaign promises to restore prosperity to everyday Americans—is staggering. Notably, by calling for cuts to Social Security, the budget violates one of Trump’s most significant promises.

Indeed, his proposed repeal of the estate tax alone—a tax that only affects the wealthiest 0.2 percent of estates—would cost the same as feeding more than 6 million seniors for a year through Meals on Wheels, a program facing deep cuts under the Trump budget.

And that is just one of several massive giveaways to the wealthy that President Trump calls for in this budget proposal while slashing critical investments in education, infrastructure, jobs, and more that make it possible for workers and families to get ahead. Here are seven ways that President Trump’s budget proposal threatens to do them serious damage.

Trump’s Budget Would Hit These States the Hardest
Source: Sam Petulla, NBC News, May 23, 2017

The Trump administration unveiled a budget for 2018 on Tuesday that seeks to overhaul many of the country’s safety-net programs for low-income and struggling Americans. Though these cuts are popular among Republican lawmakers, they affect programs that are actually more commonly used in Republican-leaning states than in Democratic ones, and that in many cases benefit white voters without college degrees — a demographic group that strongly supported President Donald Trump in the 2016 election.
The programs experiencing the deepest cuts provide assistance for health care services to children, the poor and disabled, and that supplement food and housing for those with low incomes. Most of the programs were created decades ago by Democratic presidents.

Report to the New Leadership and the American People on Social Insurance and Inequality

Source: Benjamin W. Veghte, Elliot Schreur, and Alexandra L. Bradley (eds.), National Academy of Social Insurance, January 2017

From the abstract:
Our nation’s social insurance infrastructure forms the foundation of economic and health security for American workers and their families. Like all infrastructure, it must be periodically strengthened and modernized if it is to continue to meet the needs of a changing economy and society. This Report presents the new Administration and Congress with a range of evidence-based policy options, developed by the nation’s top social insurance experts, for doing so.

The first part of the Report takes stock of the policy challenges facing existing social insurance programs: Social Security, the major health insurance programs, and Unemployment Insurance. The second part discusses potential new directions for social insurance in coping with emerging needs in the areas of long-term services and supports, caregiving supports, and nonstandard work.