This section presents long-range projections of the operations of the combined Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds and of the Hospital Insurance (HI) Trust Fund expressed as a percentage of gross domestic product (GDP). While expressing these fund operations as a percentage of taxable payroll is the most useful approach for assessing the financial status of the programs (see table
IV.B1 and section .
IV.B.1), analyzing them as a percentage of GDP provides an additional perspective on these fund operations in relation to the total value of goods and services produced in the United States.
Table VI.F4 shows estimated income excluding interest, total cost, and the resulting balance of the combined OASI and DI Trust Funds, of the HI Trust Fund, and of the combined OASI, DI, and HI Trust Funds, expressed as percentages of GDP on the basis of each of the three alternative sets of assumptions. The estimated GDP on which these percentages are based is also shown in table
VI.F4. For OASDI, income excluding interest consists of payroll-tax
contributions, proceeds from
taxation of benefits, and various reimbursements from the
General Fund of the Treasury. Total cost consists of
benefit payments,
administrative expenses,
net transfers from the trust funds to the Railroad Retirement program, and payments for
vocational rehabilitation services for disabled beneficiaries. For HI, income excluding interest consists of payroll-tax contributions (including contributions from railroad employment) and proceeds from taxation of OASDI benefits. Total cost consists of outlays (benefits and administrative expenses) for insured beneficiaries. Both the HI income and cost are on an incurred basis.
The OASDI annual balance (income excluding interest, less cost) as a percentage of GDP is projected to be positive on the basis of the low-cost assumptions until 2020. After 2019, deficits increase to a peak in 2032 and decrease thereafter. By 2057, the OASDI balance becomes positive, reaching 0.20 percent of GDP in 2083. The OASDI balance is projected to be positive through 2015 on the basis of the intermediate assumptions and negative thereafter. Annual deficits increase from 2016 through 2035, decrease from 2036 through 2053, and then increase thereafter. On the basis of the high-cost assumptions, the OASDI balance is projected to be positive through 2012, after which time balances become permanently negative, with increasing deficits thereafter. The HI balance is projected to be negative in the first projection year under all three sets of assumptions, with deficits generally increasing steadily thereafter, though to different degrees, under each set of assumptions.
The combined OASDI and HI balance as a percentage of GDP is projected to be positive through 2018 under the low-cost assumptions, but negative throughout the projection period under the intermediate and high-cost assumptions. Between 2013 and about 2035, under all three sets of assumptions, the combined OASDI and HI balance as a percentage of GDP is generally projected to decline (or deficits increase) substantially because the
baby-boom generation reaches
retirement eligibility age during these years. After 2035, annual deficits increase fairly steadily under the intermediate and high-cost assumptions, but decrease through 2054 and increase thereafter under the low-cost assumptions.
By 2083, the combined OASDI and HI balances as percentages of GDP are projected to range from a deficit of 0.85 percent for the low-cost assumptions to a deficit of 12.03 percent for the high-cost assumptions. Projected balances differ by a much smaller amount for the tenth year, 2018, ranging from a positive balance of 0.06 percent for the low-cost assumptions to a deficit of 1.66 percent for the high-cost assumptions.
The summarized long-range (75-year) balance as a percentage of GDP for the combined OASDI and HI programs varies among the three alternatives, by a relatively large amount (from a deficit of 0.18 percent, based on the low-cost assumptions, to a deficit of 6.11 percent, based on the high-cost assumptions). The 25-year
summarized balance varies by a smaller amount (from a positive balance of 0.34 percent to a deficit of 2.08 percent). Summarized rates are calculated on the present-value basis including the trust fund balances on January 1, 2009, and the cost of reaching a target trust fund level equal to 100 percent of the following year’s annual cost at the end of the period. (See section
IV.B.4 for further explanation.)
