Financial status of the Social Security Program

This study, originally a background paper for the National Commission on Social Security Reform and published as Appendix J in the Commission's Report, outlines the dimensions of the financing problem the Commission addressed. Prepared by Robert J. Myers, the Commission's Executive Director and a former Deputy Commissioner and Chief Actuary of the Social Security Administration, it discusses, in turn, the operational and funding procedures of the Social Security Trust Funds, the measures developed to determine the financial soundness of the program, and the financial status of each trust fund in the past, at present, and projected for the future. The author shows how program funding was gradually shifted from a modified-reserve to a pay-as-you-go basis and how the balance between income and outgo was disrupted by adverse economic conditions during 1979-81, when prices rose more rapidly than wages and unemployment was substantially higher than anticipated. Using several different economic assumptions, Myers estimates how extensive the deficits of the program could be over the short run (the remainder of the 1980's) and over the long term (the period 1982-2055).