SOCIAL SECURITY TRUST
TWO ADDITIONAL YEARS OF SOLVENCY
The Social Security Board of Trustees announced
today in their 1999 annual report
that the long-range projections of the Social Security trust funds
have improved by two years over last year's report. Under the new
projections, the Social Security trust fund assets will be depleted
in 2034 rather than 2032 as predicted last year.
According to the Trustees, improvement in
the financial condition of the trust funds is the result of continued
strong economic growth resulting in reduced unemployment, higher
wages and low inflation. In addition, recent adjustments made by
the Bureau of Labor Statistics to improve the measurement of the
Consumer Price Index were a contributing factor.
As they did last year, the Trustees urged
legislative action in the immediate future to restore long-term
balance to Social Security.
"We welcome these favorable developments
for Social Security and Medicare. Nonetheless, the need to put these
programs on sound financial footing for the long term must still
be met," said Treasury Secretary Rubin. "We should move forward
on a bipartisan basis to finish the job by using the surpluses to
pay down the national debt and substantially extend the exhaustion
date of the Social Security and Medicare Trust Funds."
"Social Security must remain a rock solid
benefit that current and future retirees can count on. Today's good
news must not lull us into complacency," commented
Kenneth S. Apfel, Commissioner of Social Security. "We should
not just celebrate today's prosperity but use it to meet the challenges
of the future. We cannot rest until we are able to meet our commitments
to our youngest workers. Social Security must be on firm financial
footing when they retire. By acting sooner rather than later, in
good economic times, we can make gradual changes to the system that
will allow people time to plan adequately for their retirement years.
If we have the courage to make the thoughtful decisions for Social
Security now, we will strengthen Social Security for future generations
In his State of the Union Address, President
Clinton proposed transferring 62 percent of the budget surpluses
($2.8 trillion) to Social Security over the next 15 years and investing
about 20 percent of the transferred surpluses in private markets
to earn a better rate of return. To achieve a 75-year actuarial
balance in the trust funds, the President called on Congress to
work with him on a bipartisan basis to make the decisions necessary
to strengthen the Social Security program.
The 1999 annual report also indicates that
in 2014, trust fund expenditures will begin to exceed tax revenues,
a year later than estimated in 1998. Beginning in 2022, trust fund
assets will be drawn down to pay benefits until exhaustion in 2034.
At that time, tax revenues will be sufficient to pay only 71 percent
of benefit obligations. Over the 75-year long-range actuarial forecast,
the projected actuarial balance is a deficit of 2.07 percent of
taxable payroll, compared to 2.19 percent projected in 1998.
In its 59th report to the Congress, the Trustees
also reported the following:
· The Old-Age and Survivors, and Disability
Insurance Trust Funds paid benefits amounting to $375 billion in
1998, and there were 44.2 million beneficiaries on the rolls at
the end of 1998;
· In 1998, an estimated 148 million
people worked in jobs covered by Social Security;
· Income to the combined trust funds
amounted to $489.2 billion in 1998 and expenditures were $382.3
billion, increasing the assets of the combined funds by $106.9 billion
to $762.5 billion at the end of December 1998;
· Interest earnings on the invested
assets of the combined trust funds were $49.3 billion, representing
an effective annual interest rate of 7.2 percent. The average interest
rate on new securities purchased was 5.6 percent; and
· Administrative expenses were $3.5
billion, or about 0.9 percent of benefit payments for the year.
The Board of Trustees is composed of six
members, four of whom serve automatically by virtue of their positions
with the Federal Government: the Secretary of the Treasury, who
is the managing Trustee; the Secretary of Labor; the Secretary of
Health and Human Services; and the Commissioner of Social Security.
The other two members are appointed by the President and confirmed
by the Senate to serve as public representatives. Stephen G. Kellison
and Marilyn Moon are currently serving four-year terms that began
on July 20, 1995.