The short-term effects of the coronavirus pandemic are inescapable and evident everywhere in the U.S., while its long-term consequences will emerge over time, in particular for the federal budget, including the Social Security program’s finances.
On April 22, the Social Security Board of Trustees published its annual report, in which it projected that combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance Trust Funds would become depleted in 2035, absent congressional action before then.
However, the report did not take into account COVID-19’s effects on the program’s finances.
“Given the uncertainty associated with these impacts, the Trustees believe it is not possible to adjust estimates accurately at this time,” Andrew Saul, Social Security’s commissioner, said in a statement.
“The duration and severity of the pandemic will affect the estimates presented in this year’s report and the financial status of the program, particularly in the short term.”
The Penn Wharton Budget Model, released Thursday, sought to fill that gap by including the pandemic’s effects in its latest projections of Social Security’s financial outlook.
PWBM is an independent research organization housed at the Wharton School of the University of Pennsylvania.
According to PWBM, under the “U-shaped recession” it projected, the pandemic will bring forward the OASDI trust fund depletion date by four years, from 2036 to 2032.
This will happen, it said, because reduced Social Security revenue from pandemic-induced job losses, lower earnings and low interest rates will outweigh corresponding reductions in costs from lower total benefits paid.
PWBM said that under a quicker recovery, or “V-shaped” recession, the OASDI trust fund would instead run out two years earlier, in 2034.
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