2014 Long Term Budget Outlook (pdf 64pp)
While we are still waiting on the 2014 Social Security Report we do have today the release of CBO’s annual Budget Outlook which among other parts does include a chapter on Social Security. I plan to extract and post some Tables from it but in the meantime people can have their own look and draw their own conclusions. Key pieces:
p. 10 Table 1-1. Projected Spending and Revenues in Selected Years Under CBO’s Extended Baseline
Note that under CBO’s 10 year window (the one used to score legislation) non-interest spending is projected to drop from 19.1% of GDP to 18.8%. Or essentially flat, and BTW this includes spending on Social Security and Medicare. On the other hand TOTAL spending INCLUDING interest is projected to increase from 20.4% to 22.1%. With the entire difference being made up by interest payments rising from 1.3% of GDP to 3.3%. I for one would be interested in seeing and discussing the interest rate assumptions that go into that increase, perhaps it just represents some reversion of 10 year Bond Rates to the mean. Please chime in in comments.
p. 25-44 Chapter 2: The Long-Term Outlook for Major Federal Health Care Programs
Lots and lots of good stuff here. I haven’t even started sampling yet. Bon appetit!
p. 45-51 Chapter 3: The Long-Term Outlook for Social Security
Ditto. And my first stop at this particular buffet table, with reports in the next hours or days. My first focus might well be on: Table 3-1. Financial Measures for Social Security Under CBO’s Extended Baseline on p. 50. Note that while the main text does highlight the need for an “immediate and permanent increase of 4.0%” this is based on the assumption that despite all the uncertainties in the projections that we need to address the 75 year actuarial gap in one gulp. But an inspection of Table 3-1 shows that the actuarial gap for the first twenty five years is just 2.1% of payroll or 0.7% of GDP. Which might suggest to some that an plan to address the first 25 years IN the first 25 years by implementing something like the Northwest Plan’s phased in FICA increases while putting in contingency plans for actions in the decades that follow that might be more reasonable and prudent than trying to pre-fund a retirement insurance reserve 75 years in advance.
But let me turn this over to you all.