Got into an
interesting discussion with Visbek, who made me run the numbers using the figuring from
here to see what the net short term and long term effects on the deficit would be.
Final Post copied below:
OASI expenditures in 2015 were
$750 Bn. That represents a populace that is 100% on the government for benefits, but that dies off at an average rate of 1/19th per year. Your source points out that means testing the 1% gives us an 8% savings, so we'll take off 8% of expenditures for $690 Bn as our starting point for expenditures before we figure out the effect of slowing the growth. That produces 37% growth, but it does so over 75 years in an expanding manner. So, 1-(.37/75), we'll take 0.5166% off each year, starting in 2017.
Revenue first bumps up when we pop the cap. According to
your source, it increases from 12.9% of payroll to 15.3%, and increases from there to about 15.57 by 2040. We will average that to 15.43
So, to get an idea of revenue, take Social Security's deficit for 2015 -
$45 bn, subtract it from 750 to get $705 Bn. That's how much we divide by 12.9 to figure out what a percentage of payroll is. Multiplying that number by 15.43 gives us $843.27 Bn. The trustees assume that Payroll will grow by about
1.7%. So we will project $843.27*.2 for the initial years revenues, and increase that number by 1.7% every year.
So, the point at which those lines cross and we start producing surpluses rather than deficits for the original populace is 2027-2028. By 2044, the surpluses produced from that point forward have paid off the debts accumulated during the start-up years, producing a net $183 Bn surplus:
View attachment 67192715
Then, however, we have to figure out the costs of the new retirees.
We reduce the growth in benefits and the cost of benefits by the same (1/37th, 8% for the top 1%) as we did the original retirees. We take each age cohort, assume that 90% of a birth year make it to social security retirement, and say that they cost (750bn/19/cohortsize)*(new retiree cohort size). Median income is applied as is an average monthly SS check of $1,224. When a cohort dies, they pay a 50% tax on their SS accounts before those accounts are rolled into the SS accounts of their heirs, and those monies are rolled into the cost to government to count against the deficits created by the first 19 cohorts whose accounts did not fully replace their Social Security benefit.
We see that on an annual basis, the program for the new retirees begins to run a surplus starting in 2035 (so, a couple of years after they used to tell us Social Security would be bankrupt, we are running surpluses instead), and the cumulative debts run up by the annual deficits of the early years are paid off, and we have a net $59 Bn surplus by 2041. So, interestingly, the costs of these cohorts are completely paid off slightly sooner than the older cohorts.
View attachment 67192727
However, these are two portions of the same system. We need to add together the annual deficits to get an idea of the annual cost, and add together the rolling total costs, to get an idea of the impact on the national debt. What we see when we do that is by 2029, the system is running an annual surplus, and by 2043, we have paid off the costs from the previous cohorts entirely, and are now returning hundreds of billions of dollars to the treasury. By 2050, Social Security has provided more than $3.8 Trillion in surpluses, and is funding other government programs to the tune of $560 Billion a year. By 2060 (which you mentioned), that number has climbed to just shy of an inflation-adjusted (all numbers here are)
trillion dollars a year.
View attachment 67192728
