Social Security’s Financial Outlook: The 2008 Update in Perspective

Introduction

The Trustees of the Social Security system have just issued the 2008 projections for the system over the next 75 years.  The report contains two surprises.  First, the 75-year deficit dropped to 1.70 percent of taxable payrolls from the roughly 2 percent it has been for the last 14 years.  The decline was driven primarily by a change in the way Social Security projects immigration.  Although the Trustees still project that the trust fund will be exhausted in 2041, the improved outlook enables scheduled payroll taxes to cover more than three-quarters of promised benefits after that point.  The second noteworthy difference between this report and earlier ones is that it has not been signed by any public trustees.  But this omission reflects a failure with the political process, not with the program itself.