The Congressional Budget Office has released its score of the Social Security 2100 Act, a bill aimed at increasing Social Security benefits and strengthening the trust funds, and there is some good news to report from the CBO and some not so great news.
According to the CBO’s analysis of the bill, enactment would do the following between 2020 and 2029:
- Increase Social Security outlays by $386 billion;
- Increase federal revenues by $911 billion, the net effect of a decrease in on-budget revenues of $719 billion and an increase in off-budget revenues of $1.629 trillion; and
- Reduce the federal deficit by $525 billion (excluding any effects on direct spending for programs other than Social Security).
The problem is that although the authors of the bill projected that the measure would stabilize the Social Security trust funds until 2100, the CBO does not agree. An even greater concern with the bill is the CBO’s estimate that the trust funds could run out of the money as early as 2041, although projections after this year look good.
One of the confusing aspects of the CBO’s analysis is that the bill would decrease the federal deficit, but it would increase budget deficits by hundreds of billions of dollars each decade. The CBO’s explanation of this is that a percentage of taxes paid on Social Security benefits would no longer go to Medicare and revenues would be reduced.
This CBO analysis does not kill the bill. It is just one analysis of the bill and certain measures in the bill can be changed or adjusted. The report was not all bad as the CBO found many good things within it. Below is a summary of the CBO report.
Beginning in January 2020, H.R. 860 would increase Social Security benefits for most recipients, change the measure used to determine cost-of-living adjustments (COLAs), increase the minimum benefit for some new recipients with low lifetime earnings, and include earnings above $400,000 in the benefit formula. The bill also would increase revenues by gradually raising the payroll tax rate and subjecting earnings above $400,000 to the payroll tax. In addition, it would reduce the individual income tax liability on Social Security benefits. Furthermore, H.R. 860 would establish a new Social Security Trust Fund to replace the existing OASI and DI trust funds.
