Social Security debate (United States)

This article concerns proposals to change the Social Security system in the United States. is a program officially called "Old-Age, Survivors, and Disability Insurance" ( ), in reference to its three components. It is primarily funded through a dedicated . During 2009, total benefits of $686 billion were paid out versus income (taxes and interest) of $807 billion, a $121 billion annual surplus. An estimated 156 million people paid into the program and 53 million received benefits, roughly 2.94 workers per beneficiary.

Reform proposals continue to circulate with some urgency, due to a long-term funding challenge faced by the program. Starting in 2015 and continuing thereafter, program expenses are expected to exceed cash revenues. This is due to the aging of the generation (resulting in a lower ratio of paying workers to retirees), expected continuing low (compared to the baby-boom period), and increasing . Further, the government has borrowed and spent the accumulated surplus funds, called the .

During 2010, the Trust Fund held $2.5 trillion in government account series bonds—essentially "IOUs" or claims on the government's general fund or tax revenues. This amount is part of the total national debt of $13.3 trillion as of August 2010. By 2015, the government is expected to have borrowed nearly $3.25 trillion against the Social Security Trust Fund.

Between 2015 and 2037, Social Security has the legal authority to draw amounts from other government tax sources besides the payroll tax, to fully fund the program. However, this will liquidate the Trust Fund during that period. By 2037, the Trust Fund is expected to be officially exhausted, meaning that only the ongoing payroll tax collections thereafter will be available to fund the program. There are certain key implications to understand under current law, if no reforms are implemented:

• Payroll taxes will only cover 78% of the scheduled payout amounts after 2037. This declines to 75% by 2084. Without changes to the law, Social Security would have no legal authority to draw other government funds to cover the shortfall and payments would decline without a large tax/revenue increase or increase in eligibility age.
• Between 2015 and 2037, redemption of the trust fund balance to pay retirees will draw approximately $4 in government funds from sources other than payroll taxes. This is a funding challenge for the government overall, not just Social Security.
  
• The of unfunded obligations under Social Security as of August 2010 was approximately $5.4 trillion. In other words, this amount would have to be set aside today such that the principal and interest would cover the shortfall over the next 75 years. The estimated annual shortfall averages 1.92% of the payroll tax base or 1.0% of .
  
• The annual cost of Social Security benefits represented 4.8% of (a measure of the size of the economy) in 2009. This is projected to increase gradually to 6.1% of GDP in 2035 and then decline to about 5.9% of GDP by 2050 and remain at about that level.
  

Former President called for a transition to a combination of a government-funded program and personal accounts ("individual accounts" or "private accounts") through partial of the system. President Barack Obama "strongly opposes" privatization or raising the retirement age, but supports raising the cap on the payroll tax ($106,800 in 2009) to help fund the program.

Chairman said on October 4, 2006: "Reform of our unsustainable entitlement programs should be a priority." He added, "the imperative to undertake reform earlier rather than later is great." The tax increases or benefit cuts required to maintain the system as it exists under current law are significantly higher the longer such changes are delayed. For example, raising the payroll tax rate to 14.4% during 2009 (from the current 12.4%) or cutting benefits by 13.3% would address the program's budgetary concerns indefinitely; these amounts increase to around 16% and 24% if no changes are made until 2037