According to the Associated Press, the nonpartisan Congressional Budget Office said Wednesday that this year alone, Social Security is projected to collect $45 billion less in payroll taxes than it pays out in retirement, disability and survivor benefits. That figure swells to $130 billion when the new one-year cut in payroll taxes is included.
The program has been supported by a 6.2% payroll tax paid by both workers and employers. In December, Congress passed a one-year tax cut for workers, to 4.2%. The lost revenue is to be repaid to Social Security from general revenue funds.
In its Budget and Economic Outlook report, the CBO estimates that, under current law, outlays for Social Security will reach $727 billion in 2011, or 4.8% of GDP. Over the next decade, spending for Social Security benefits will climb steadily as the nation’s elderly population grows and as average benefits rise.
According to the report, CBO estimates by 2021, Social Security outlays will total $1.3 trillion, or about 5.3% of GDP. Over the 2011–2021 period, as more baby boomers become eligible to receive benefits under the program, the number of people collecting those benefits will increase by an average of about 3% per year, reaching 59 million by 2021.The AP reports that Social Security supporters are adamant that the program will be repaid, just as the U.S. government repays others who invest in U.S. Treasury bonds. “It’s an IOU that is backed by Treasury bonds and the faith and credit of the United States government,” said Senator Bernie Sanders (I-Vermont), according to the AP. “It is the same faith and credit that enables us to borrow from rich people and from China and from other countries. As you well know, in the history of this country, the United States has never defaulted on one penny owed to a creditor.”