Social Security’s long-term prospects are better than previously thought, a congressional report said yesterday, estimating that the program won’t become insolvent until 2052, a decade later than projected earlier this year.
The report by the nonpartisan Congressional Budget Office (CBO) still paints a bleak financial picture for the future of the retirement system, which faces significant strain as the baby boom generation retires.
But the report’s projection will jump-start debate this election year about President Bush’s proposal to revamp the system by adding personal investment accounts.
The bipartisan trustees who oversee Social Security predicted in March that the system’s shortfall would be 1.89 percent of taxable payroll, or about $3.7 trillion.
But using rosier economic assumptions over the next 75 years on such things as inflation and productivity, congressional budget forecasters said the shortfall would be 1 percent of taxable payroll.
“While the differences in the estimates should be fully studied by economists and actuaries, they are not an excuse to delay strengthening Social Security,” said Sen. Lindsey Graham, South Carolina Republican, who has introduced legislation to overhaul Social Security to let younger workers invest some of their payroll taxes in the stock market through personal accounts.
“Even with the more optimistic assumptions used by the CBO, the long-term deficits facing Social Security do not go away,” he said.
But opponents of plans to partially privatize Social Security say the new report raises questions about the severity of system’s finances.
“The CBO report shows just how tentative estimates about the problems of Social Security are and how absurd it would be for policy-makers to dramatically alter the program based on those numbers,” said Barbara Kennelly, president of the National Committee to Preserve Social Security and Medicare.
Both reports pegged 2019 as the year the system will start paying out more in benefits than it takes in payroll taxes.