TABLE C-1 Projected Social Security Cash Flow as a Percentage of GDP, Selected Years, Current Law Compared with Options 1-4

Year

Current Law

Option 1a

Option 2b

Option 3c

Option 4d

2010

0.1

0.1

0.1

0.1

0.1

2015

0.0

0.1

0.1

0.2

0.3

2020

−0.5

−0.3

−0.3

−0.2

−0.2

2025

−1.0

−0.6

−0.7

−0.6

−0.5

2030

−1.3

−0.8

−0.8

−0.7

−0.7

2035

−1.4

−0.8

−0.8

−0.7

−0.8

2040

−1.3

−0.6

−0.4

−0.5

−0.6

2045

−1.2

−0.4

−0.2

−0.3

−0.4

2050

−1.2

−0.2

−0.2

−0.3

−0.3

2055

−1.2

−0.1

−0.1

−0.3

−0.3

2060

−1.2

0.0

−0.1

0.0

−0.1

2065

−1.2

0.0

0.0

−0.1

−0.1

2070

−1.3

0.0

0.0

−0.1

0.0

2075

−1.3

0.0

0.0

−0.1

0.0

2080

−1.4

0.0

0.0

0.0

0.0

2082

−1.4

−0.1

0.0

0.0

−0.1

2084

−1.5

−0.1

0.0

0.0

−0.1

NOTE: A year’s “cash flow” is its Social Security revenues minus its expenditures. When the cash flow is positive, the balance in the trust fund increases (see next table). When negative, the trust fund balance decreases.

aChanges in benefits only.

b2/3 benefit growth reductions; 1/3 payroll tax increases.

c1/3 benefit growth reductions; 2/3 payroll tax increases.

dPayroll-tax increases only.

dexing to wage levels alone. (By and large, wage levels rise through time faster than price levels.) The new provision would begin in 2012 and its effects (relative to the current-law formula) would accumulate through 2049. Then the current-law adjustment would resume until 2070, at which time progressive indexing would restart.

  • Consistent with discussion by the Office of the Actuary of the Social Security Administration (2009a:3-5), the “progressive indexing” of benefits to wage and price levels that we use differs from the “progressive price indexing” developed for Robert Pozen in 2003, although for both, the preretirement calculation of benefits for most middle- and upper-earning workers would increase more slowly, as general wage and price levels rise, than under the current formula. In Options 1-3, this benefit-indexing formula would be unchanged from current law for about the lowest-earning 30 percent of workers and for disabled workers. For others, indexing would in effect be based on a mix of wage and price levels, with



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