CBO Assessment of Social Security Program Largely Unchanged

The Congressional Budget Office (CBO) has issued new projections concerning the finances of the Social Security system, and reports that its expectations are largely the same as those it articulated in 2018.

In “CBO’s Long-Term Social Security Projections: Changes Since 2018 and Comparisons With the Social Security Trustees’ Projections” the CBO says that its projections for Social Security and its future finances are similar to those of 2018.

The CBO’s projections of Social Security’s 75-year actuarial balance hold in the new report largely at the levels that CBO projected in 2018 by two measures:

• As a percentage of gross domestic product, the CBO once again expects that Social Security will stand at the -1.5% of GDP.
• As a percentage of taxable payroll, the CBO’s expectation is that Social Security’s finances will stand at -4.6%, 0.2 percentage point lower than the projections it made in 2018.

There is a mixed bag of influences, the CBO says. Factors that make the outlook poorer include:

• reduced projections of interest rates;
• the inclusion of another year (2093) with a relatively large difference between Social Security’s revenues and outlays; and
• technical changes.

But there are positive factors, too, the CBO says, including:

• higher overall rates of projected labor force participation;
• lower projections of the number of workers who will be awarded disability benefits; and
• a slightly lower projected share of the population age 65 or older.

The CBO notes that for the period 2018-93, it projects larger Social Security deficits than do the Social Security Trustees. The CBO attributes that to their differing projections concerning population, components of GDP growth, earnings subject to Social Security payroll taxes and interest rates adjusted to remove the effects of inflation.