# Presentation: 714588

## The Honorable David M. Walker

- Comptroller General of the United States
- February 9, 2005

## Composition of Spending as a Share of GDPUnder Baseline Extended

**Composition of Spending as a Share of GDP****Under Baseline Extended**

**Revenue**

**Social Security**

**Medicare & Medicaid**

**Net Interest**

**All other spending**

**Percent of GDP**

- Notes:  In addition to the expiration of tax cuts, revenue as a share of GDP increases through 2015 due to (1) real bracket creep, (2) more taxpayers becoming subject to the AMT, and (3) increased revenue from tax-deferred retirement accounts.  After 2015, revenue as a share of GDP is held constant.
- Source:  GAO’s January 2005 analysis.

## Composition of Spending as a Share of GDPAssuming Discretionary Spending Grows with GDP after 2005 and All Expiring Tax Provisions are Extended

**Revenue**

**Social Security**

**Medicare & Medicaid**

**Net Interest**

**All other spending**

**Percent of GDP**

- Notes:  Although expiring tax provisions are extended, revenue as a share of GDP increases through 2015 due to (1) real bracket creep, (2) more taxpayers becoming subject to the AMT, and (3) increased revenue from tax-deferred retirement accounts.  After 2015, revenue as a share of GDP is held constant.
- Source:  GAO’s January 2005 analysis.

## Social Security and Medicare’s Hospital InsuranceTrust Funds Face Cash Deficits

**Medicare HI****cash deficit****2004**

**Social Security****cash deficit ****2018**

**Billions of 2004 dollars**

- Source: GAO analysis based on the intermediate assumptions of *The 2004 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and the Federal Disability Insurance Trust Funds *and *The 2004 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds*. The above excludes Medicare Part B and the newly enacted Medicare Part D benefit.

**Notes:**
Today social security & medicare add to the surplus--they take in more than they spend

cash deficit reached in 2017;  at that point drain on system

options

## Social Security, Medicare, and Medicaid Spending as a Percent of GDP

**Percent of GDP**

**Social Security**

**Medicaid**

**Medicare**

- Note:  Social Security and Medicare projections based on the intermediate assumptions of the 2004 Trustees’ Reports.  Medicaid projections based on CBO’s January 2004 short-term Medicaid estimates and CBO’s December 2003 long-term Medicaid projections under mid-range assumptions.
- Source:  GAO analysis based on data from the Office of the Chief Actuary, Social Security Administration, Office of the Actuary, Centers for Medicare and Medicaid Services, and the Congressional Budget Office.

**Notes:**
Today social security & medicare add to the surplus--they take in more than they spend

cash deficit reached in 2017;  at that point drain on system

options

## Key Dates Highlight Long Term Challenges of the Social Security System 

| Date | Event |
| --- | --- |
| 2008 | Social Security cash surplus begins to decline |
| 2018 | Annual benefit costs exceed cash revenue from taxes |
| 2028 | Trust fund ceases to grow because even taxes plus interest fall short of benefits |
| 2042 (SSA)
2052 (CBO) | Trust fund exhausted, annual revenues sufficient to pay about 73% – 81% of promised benefits |

- Sources: Social Security Administration, *The 2004 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds*. Washington, DC, March 2004. Congressional Budget Office, *The Outlook for Social Security: Potential Range of Social Security Outlays and Revenues Under Current Law*. Washington, DC, June 2004.

## The Honorable David M. Walker

- Comptroller General of the United States
- February 9, 2005