The 2020 Long-Term Budget Outlook

Spending for Social Security and the Major Health Care Programs

Mandatory programs have accounted for a growing share of the federal government’s noninterest spending over the past few decades. Most of that growth has occurred because the number of people age 65 or older—the group that receives most of the benefits provided by Social Security and Medicare—has been growing significantly. In CBO’s extended baseline, the aging of the U.S. population continues to drive up outlays for Social Security and Medicare. Outlays for Medicare also climb because, in CBO’s estimation, health care costs per person will continue to rise. By 2050, CBO projects, federal spending for Social Security, Medicare, and Medicaid (the federal health care program for people with limited income and resources) for people age 65 or older would account for about half of all federal noninterest spending, rising from about one-third in 2020.

Social Security. Social Security is the largest single program in the federal budget. Its two components pay benefits to about 65 million people in all. The larger of the two, Old-Age and Survivors Insurance (OASI), pays benefits to retired workers, their eligible dependents, and some survivors of deceased workers. The smaller program, Disability Insurance (DI), makes payments to disabled workers and their dependents until those workers are old enough to claim full retirement benefits under OASI.

In CBO’s projections, spending for Social Security increases noticeably as a share of the economy, continuing the trend of the past five decades. The number of Social Security beneficiaries rises from about 65 million in 2020 to 96 million in 2050, and spending for the program increases from 5.3 percent of GDP to 6.3 percent over that period (see Figure 9). Those projections reflect the assumption that Social Security will continue to pay benefits as scheduled under current law, regardless of the status of the program’s trust funds.21 That approach is consistent with a statutory requirement that CBO’s 10-year baseline projections incorporate the assumption that funding for such programs is adequate to make all payments required by law.22[19]

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