Economic and demographic changes are responsible for most of the deterioration in the Social Security program's long-range financial position in the past year.
Robert Reischauer, a trustee on the Social Security and Medicare boards of trustees, gave that assessment today at a Social Security trustees' report hearing organized by the House Ways and Means Committee's Social Security subcommittee.
The trustees now project that the main Social Security trust fund will be exhausted in 2038. A year ago, the trustees were predicting the fund would be empty in 2040.
The total Social Security payroll tax rate is now 12.4%.
Over a 75-year projection period, the trust fund would need an extra 1.92% of taxable payroll to come into balance, up from 1.62% of taxable payroll a year ago, Reischauer said.
"This 0.3 percentage point change is the largest single-year deterioration in Social Security's actuarial balance since the 1994 trustees' report," Reischauer said, according to a written version of his remarks provided by the committee.
"No legislation enacted during the past year significantly affected Social Security's long-range financial position," Reischauer said.
Improvements in mortality account for about one-third of the increase in the long-range actuarial deficit, and a soft economy and low interest rates account for about one-six of the deterioration, Reischauer said.
Improvements in methods and data account for another one-sixth of the deterioration, Reischauer said.
