•Press Release Economic Growth Health and Social Programs
June 1, 2005
For Immediate Release: June 1, 2005
Contact: Lynn Erskine, 202-293-5380 x115
Washington, DC: Based on current trends, by 2052, when Social Security is projected to first face a shortfall, annual healthcare spending will have increased $5,000 per person and the dollar will have declined by 30 percent or more, according to a report by the Center for Economic and Policy Research. The report, "Things That Will Happen Before Social Security Faces a Shortfall," cites nine disturbing trends that will result in devastating human and environmental costs by 2052.
"Many policymakers seem to view soaring health care costs and plunging home prices as being less worrisome than the projected shortfall in Social Security," said Dean Baker, CEPR economist and author of the report. "Yet, the public should be aware of the other long-term problems facing the country so that it can set its own priorities."
Based on current trends, we can expect that by 2052:
HEALTHCARE: Annual spending on healthcare will have increased by an amount equal to 12 percentage points of GDP — an increase in annual spending of almost $5,000 per person (measured at the 2005 level of GDP).
PRESCRIPTION DRUGS: Annual spending on prescription drugs will have increased by an amount equal to 2.7 percentage points of GDP — an increase in annual spending of $1,000 per person (measured at the 2005 level of GDP).
HOUSING: The housing bubble will have burst, destroying more than $5 trillion in bubble wealth created by the temporary run-up in home prices. This translates into a loss of $17,000 per person.
THE FALLING DOLLAR: The U.S. dollar will have declined by 30 percent or more against the currencies of trading partners. This will add more than 2.0 percentage points to the annual rate of inflation and reduce annual consumption by approximately $2,000 per person.
THE CRIMINAL JUSTICE SYSTEM: The number of people in jail or prison will have increased to almost 7 million, causing a projected increase in spending on criminal justice of $310 billion a year (measured at the 2005 level of GDP) or $1,000 per person.
CEPR's report also includes economic projections for China and India and environmental trends such as climate change and species extinctions.
The Congressional Budget Office (CBO) projects that Social Security will first face a shortfall in the year 2052. Up until that year, Social Security is projected to be able to pay all scheduled benefits. After 2052, it is projected to be able to pay 80 percent of scheduled benefits, which will still be more than 30 percent larger than the benefits received on average by current retirees.
