OASDI (Old-Age and Survivors Insurance): fiscal basis and long-range cost projections

A thorough understanding of the financing structure of social security is a prerequisite to serious discussion of the financial condition of the program. In examining this structure, it becomes clear that the most important test of the program's financial soundness is whether expected future income to the funds equals expected future expenditures. Short-range and long-range cost estimates indicate that this condition does not exist and that an actual deficit of 7.96 percent of taxable payroll, equivalent to $4.3 trillion, needs to be eliminated--half of it perhaps by stabilizing benefits at current levels in relation to preretirement earnings. In addition, an unfunded accrued liability of $3.1 trillion exists, although there is no indication that this liability needs to be funded.