2016 Trustees Report
On June 22, 2016, the Social Security Board of Trustees released its annual report on the financial health of the Social Security Trust Funds. (see SSA.gov).
At a high level, the report continues the trend of the recent past in which the size of the problem continued to grow over the year while the day on which the consequences should arrive remained about the same.
- the trustees predicted the program’s combined trust funds should provide a sufficient buffer to pay scheduled benefits for both retirement and disability until 2034
- Once the cash reserves are gone, the administration will only have enough revenue to pay roughly 75 percent of scheduled benefits.
- The unfunded liabilities over the coming 75 years grew by $700 billion to $11.4 trillion.
"I fear the lack of change in the depletion date for Social Security’s combined trust funds will give lawmakers and the public a false sense that the program’s financial problems are less than urgent—that reform can continue to be put off." ~ Jason J. Fichtner Mercatus.Org
"But from 2016 to 2034 is a precariously short time to fix the program, given how long it takes to phase in reforms so that they’ll have a meaningful effect." ~ Andrew Biggs in Forbes
"The 2016 Social Security Trustees Report is little changed from the 2015 Report. It shows a small decrease in the projected 75-year shortfall" ~ Dean Baker on CEPR
In Our Opinion
The latest report is largely the same as the one from 2015. There are a number of assumptions which are overly optimistic. This report is more optimistic than CBO. It is more optimistic than the Social Security Administration's advisory board.
We are troubled by the variance with the estimates of the Congressional Budget Office("CBO"). There has been a gap in the past, but the projections were at least moving in the same direction. CBO now expects the Trust Fund to be exhausted in 2029, which is five years sooner than the estimate of SSA. As a nation, we do not even agree upon what problem we are trying to fix.
Questions You Should Be Asking
The Congressional Budget Office has very different predictions for the viability of the Trust Fund. They project that the crisis is moving faster, will be larger, and will require more resources to address. The biggest difference is the short-range results where CBO predicts that Social Security's annual revenue will be insufficient to meet its expenses in 2017 rather than 2019, as the Trustees project. This is more problematic because these are short-range estimates and they shouldn't be off by years.