Social Security's Financial Outlook: the 2011 Update in Perspective

Abstract:

The 2011 Trustees Report for the Social Security system – unlike that for the Medicare program – contains no surprises, which may explain the relative lack of attention it has received in the press. Despite reduced revenues and increased benefit claims in the short run, the system continues to face a 75-year deficit equal to about 2 percent of taxable payroll. This brief puts the current report in perspective and discusses some recent developments – the restoration of the cost-of-living adjustment, the impending exhaustion of the Disability Insurance Trust Fund, and the impact of the 2-percentage-point reduction in the employee’s portion of the payroll tax.
The good news is that, after a three-year gap, this year’s report was signed by two public trustees – one recommended by the Republicans, one by the Democrats. These independent representatives were of one voice in urging policymakers to address Social Security’s financing gap sooner rather than later.