SOCIAL SECURITY

Office of the Chief Actuary

SOCIAL SECURITY ADMINISTRATION BALTIMORE MD 21235-0001 

July 2, 2009 

The Honorable Robert Wexler 

House of Representatives 

Washington, D.C. 20515 

Dear Mr. Wexler: 

As you requested in your letter of April 28, 2009, our team of actuaries and economists in the 

Office of the Chief Actuary has produced an estimate of the effect on the financial status of the 

Social Security program of the Social Security Forever Act of 2009, H.R. 1863, which was 

introduced in the 111th Congress on April 1, 2009. The bill would apply a 6-percent tax on all 

Social Security (OASDI) covered earnings over the current-law taxable maximum amount. We 

estimate that enactment of this bill would reduce the long-range OASDI actuarial deficit by 1.12 

percent of taxable payroll, from the estimated deficit of 2.00 percent of payroll under present law 

to a deficit of 0.88 with enactment of the bill. Thus, this bill would eliminate over one half of the 

projected deficit for the OASDI program over the next 75 years under the intermediate 

assumptions of the 2009 Trustees Report. 

Description of Proposal 

This bill would maintain the current-law contribution and benefit base (taxable maximum 

amount), up to which OASDI covered earnings are currently taxed at a total rate of 12.4 percent. 

The bill would subject covered earnings above the contribution and benefit base to a total 6-

percent payroll tax rate. This rate would be 3 percent each for employees and employers, and 6 

percent for self-employment earnings. These earnings above the current-law base would not be 

used for the purpose of computing OASDI monthly benefit amounts. The effective date for this 

bill is 3 months after the date of enactment. For the purposes of this analysis, we assume this bill 

would be effective for calendar years 2010 and later. 

Long-Range Financial Effect of Bill 

Enactment of this bill would substantially improve the long-range actuarial status of the OASDI 

program, reducing the actuarial deficit by an estimated 1.12 percent of the current-law taxable 

payroll. The projected year that the combined OASDI Trust Fund would become exhausted 

would be extended 16 years, from 2037 to 2053. These estimates are based on the intermediate 

assumptions of the 2009 Trustees Report. These estimates reflect an expected behavioral 

response to the additional payroll tax that would reduce, slightly, the amount of earnings reported 

by employers, employees, and self employed. 
Page 2 – The Honorable Robert Wexler 

Table 1 (enclosed) provides detailed estimates of the effects of the bill on the financial status of 

the Social Security OASDI program. The table includes individual-year estimates of: 

• The annual income rates, annual cost rates, and annual balance for the OASDI program under 

the Bill, expressed as a percent of current-law taxable payroll; 

• The combined OASI and DI Trust Fund ratio under the proposal; 

• The annual balance under current law; and 

• The change in the annual balance that is estimated to result from enactment of the bill. 

If we may be of any further assistance regarding this bill or any other matter, please let me know. 

 Sincerely, 

 Stephen C. Goss 

 Chief Actuary 

Enclosures 
Table 1. Rep. Wexler: Social Security Forever Act of 2009 (H.R. 1863)

Year Cost Rate

Income 

Rate

Annual 

Balance

2009 12.35 12.83 0.48 354 0.48 0.00

2010 12.50 13.85 1.35 360 0.37 0.99

2011 12.37 13.93 1.56 374 0.50 1.06

2012 12.24 13.91 1.68 385 0.63 1.04

2013 12.38 13.97 1.59 391 0.52 1.07

2014 12.62 14.00 1.38 395 0.30 1.09

2015 12.87 14.04 1.16 399 0.06 1.10

2016 13.18 14.06 0.89 401 -0.22 1.10

2017 13.49 14.09 0.60 400 -0.51 1.11

2018 13.83 14.12 0.29 398 -0.83 1.12

2019 14.16 14.14 -0.02 395 -1.15 1.12

2020 14.49 14.16 -0.33 390 -1.46 1.12

2021 14.80 14.18 -0.62 384 -1.75 1.13

2022 15.09 14.20 -0.89 377 -2.01 1.13

2023 15.36 14.22 -1.14 369 -2.27 1.13

2024 15.62 14.24 -1.38 361 -2.51 1.13

2025 15.85 14.25 -1.60 352 -2.73 1.13

2026 16.07 14.27 -1.80 342 -2.93 1.13

2027 16.27 14.29 -1.99 332 -3.12 1.13

2028 16.46 14.30 -2.16 321 -3.29 1.14

2029 16.61 14.31 -2.30 309 -3.43 1.14

2030 16.75 14.33 -2.42 298 -3.56 1.14

2031 16.86 14.34 -2.52 285 -3.66 1.14

2032 16.95 14.35 -2.60 273 -3.74 1.14

2033 17.02 14.36 -2.66 260 -3.80 1.14

2034 17.06 14.36 -2.70 248 -3.84 1.14

2035 17.08 14.37 -2.72 235 -3.86 1.15

2036 17.09 14.37 -2.72 222 -3.87 1.15

2037 17.09 14.38 -2.71 209 -3.86 1.15

2038 17.06 14.38 -2.68 197 -3.83 1.15

2039 17.02 14.38 -2.64 184 -3.79 1.15

2040 16.97 14.38 -2.59 172 -3.74 1.15

2041 16.92 14.38 -2.53 159 -3.69 1.15

2042 16.86 14.38 -2.48 147 -3.64 1.16

2043 16.81 14.38 -2.43 135 -3.58 1.16

2044 16.76 14.38 -2.38 122 -3.54 1.16

2045 16.72 14.38 -2.34 110 -3.50 1.16

2046 16.69 14.38 -2.31 98 -3.47 1.16

2047 16.66 14.39 -2.28 86 -3.44 1.16

2048 16.63 14.39 -2.24 74 -3.41 1.16

2049 16.60 14.39 -2.21 61 -3.38 1.17

2050 16.58 14.39 -2.19 49 -3.36 1.17

2051 16.56 14.39 -2.17 37 -3.34 1.17

2052 16.56 14.39 -2.17 24 -3.34 1.17

2053 16.56 14.39 -2.17 12 -3.34 1.17

2054 16.57 14.40 -2.17 ---- -3.34 1.17

2055 16.58 14.40 -2.18 ---- -3.36 1.17

2056 16.60 14.40 -2.20 ---- -3.38 1.18

2057 16.62 14.41 -2.22 ---- -3.40 1.18

2058 16.65 14.41 -2.24 ---- -3.42 1.18

2059 16.67 14.41 -2.26 ---- -3.44 1.18

2060 16.69 14.42 -2.27 ---- -3.45 1.18

2061 16.71 14.42 -2.29 ---- -3.48 1.18

2062 16.74 14.42 -2.31 ---- -3.50 1.18

2063 16.76 14.43 -2.34 ---- -3.52 1.18

2064 16.79 14.43 -2.36 ---- -3.55 1.19

2065 16.82 14.43 -2.39 ---- -3.57 1.19

2066 16.85 14.44 -2.42 ---- -3.61 1.19

2067 16.89 14.44 -2.45 ---- -3.64 1.19

2068 16.93 14.44 -2.48 ---- -3.67 1.19

2069 16.97 14.45 -2.52 ---- -3.71 1.19

2070 17.01 14.45 -2.56 ---- -3.75 1.19

2071 17.05 14.46 -2.60 ---- -3.79 1.19

2072 17.10 14.46 -2.64 ---- -3.83 1.19

2073 17.14 14.46 -2.68 ---- -3.87 1.19

2074 17.19 14.47 -2.72 ---- -3.92 1.20

2075 17.23 14.47 -2.76 ---- -3.96 1.20

2076 17.28 14.48 -2.81 ---- -4.00 1.20

2077 17.33 14.48 -2.85 ---- -4.05 1.20

2078 17.38 14.48 -2.90 ---- -4.10 1.20

2079 17.43 14.49 -2.94 ---- -4.14 1.20

2080 17.48 14.49 -2.99 ---- -4.19 1.20

2081 17.54 14.50 -3.04 ---- -4.24 1.20

2082 17.59 14.50 -3.09 ---- -4.29 1.20

2083 17.64 14.51 -3.14 ---- -4.34 1.20

2084 17.69 14.51 -3.18 ---- -4.39 1.21

Summarized Rates: OASDI

Cost Rate Income Rate

Actuarial 

Balance

 2009-2083 16.00 15.12 -0.88 1.12 

Office of the Chief Actuary

All values are expressed as percents of current-law taxable payroll, except Trust Fund Ratio Social Security Administration

Based on Intermediate Assumptions of the 2009 Trustees Report July 2, 2009

Apply 6.0% payroll tax rate above current-law taxable maximum, no benefit effect, effective 2010

Change in Actuarial

Balance

Current-Law Annual 

Balance

Change in Annual 

Balance

Trust Fund Ratio 

1-1-year