This morning, the Subcommittee on Social Security examined the 2011 Annual Report of the Social Security Board of Trustees released in late May. During the hearing, the Subcommittee heard testimony from the two members of the Board who are public representatives, Charles Blahous and Robert Reischauer. Below are some of the key findings from the 2011 report.
- Social Security’s finances have worsened in the long-term compared to last year’s report. This year marks the largest single year increase in the 75-year deficit since the 1994 report.
- Social Security deficits began in 2010, and are now projected to continue permanently.
- The combined Old Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds, which provides retirement, survivor and disability benefits, are projected to be exhausted in 2036, one year earlier than last year’s report. At that time revenues will cover 77 percent of benefits.
- According to the Trustee’s report, absent reform, payroll taxes could see a 32 percent increase by 2036 (from 12.4 percent to 16.4 percent).
- Beginning in 2018, the Disability Insurance Trust Fund will be exhausted and without reform revenues will be insufficient to pay full benefits.
- Testimony offered by the witnesses emphasized the need for Congress to act now to protect this critical safety net.
“The financial challenges facing Social Security should be addressed soon. If action is taken
sooner rather than later, more options and more time will be available to phase in changes so that those affected have adequate time to prepare. Earlier action will also afford elected officials with a greater opportunity to minimize adverse impacts on vulnerable populations, including lower income workers and those who are already substantially dependent on program benefits.” Charles Blahous, Trustee, Social Security and Medicare Boards of Trustees
“The sooner we address this challenge, the less disruptive changes will be. Those most adversely affected can be given the time they need to prepare, the burden can be more equitably shared across the generations, and the political animosity and public anxiety associated with the unavoidable changes can be moderated.” Robert Reischauer, Trustee, Social Security and Medicare Boards of Trustees