The economy may be in recession, but the Social Security system continues to look strong in the short and intermediate run. The Social Security Trustee’s annual report, released March 17, 2003 is quite consistent with reports of the past few years. It suggests that without new sources of revenue or benefit cuts, the system still can meet all it’s obligations for the next four decades.

• In the "intermediate" (most likely) case, the Trust Funds will reach their maximum in 2028, and be exhausted in 2042, one year later than last year’s forecast. This continues the trend of extending the estimated period during which the Social Security system can meet all its obligations without additional funding.
• Like last year’s forecasts as well, the trustees’ "low cost" (optimistic) case suggests that the system would be able to meet all obligations far beyond the 75 year limit of the forecast. An optimistic, but still sober and reasonable, forecast suggests that there may be no Social Security crisis, ever.
• The 75 year deficit, that is, the sum of the intermediate case shortfalls after 2042, comes to a slightly larger figure than last year. This is because the 75 year estimate now adds the year 2077, which would have a large shortfall if nothing were done in the intervening 74 years.
• How big is the 75 year deficit? One way to measure it is to ask how much we would have to add to the Trust Funds each of the next 75 years to eliminate the entire deficit. If we started today, the answer is $127 billion 2003 dollars per year. If we dedicated $127 billion 2003 dollars per year for the next 75 years to the Social Security Trust Funds, there would be no actuarial deficit. By way of comparison:
  
  
  • The tax cuts enacted in 2001 and 2002 and already in place will cost about $150 billion in revenue in 2003. [1]
  • One relatively minor tax that is being eliminated under the 2001 tax cut, the federal estate tax, raised $27 billion in 2003.
  • A single large tax break -- the capital gains break (including home sales) -- cost in the neighborhood of 100 billion dollars in 2003. [2]

The latest Trustees’ report underlines earlier conclusions:

• Social Security is not in crisis today; it can meet all obligations for the next four decades.
• The revenue adjustments that would enable the system to meet all obligations for the next 75 years are quite manageable.

[1] Richard Kogan, "Are Tax Cuts a Minor or Major Factor in the Return of Deficits?" Center on Budget and Policy Priorities, February 2003.
[2] Michael Ettlinger, "Our Bucket is Leaking," in Bad Breaks All Around, The Century Foundation 2002.