News Release

SOCIAL SECURITY TRUST FUNDS GAIN
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 of Americans."

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.