2001 OASDI Trustees Report

B. TRUST FUND FINANCIAL OPERATIONS IN 2000

The table below shows the income and expenditures for the OASI, the DI, and the combined OASI and DI Trust Funds in calendar year 2000.

Note: Totals do not necessarily equal the sums of rounded components.

Eighty-seven percent of total income to the trust funds consisted of taxes paid by employees, employers and the self-employed on earnings covered by the Social Security program. These payroll taxes are paid on covered earnings up to a specified maximum annual amount, called the contribution and benefit base, which was $76,200 in 2000 and which increases automatically as the average wage in the U.S. increases. The payroll tax rates scheduled under current law for 2000 and later are shown in table II.B2.

Income tax revenue that results from taxing up to 50 percent of Social Security benefits is credited to the OASI and DI Trust Funds and provided 2 percent of total income in 2000.¹ The final major source of income to the trust funds is interest earned on their invested assets. By law these assets are invested in interest-bearing securities of the U.S. Government or in other securities guaranteed for both principal and interest by the United States. In 2000 the combined trust fund assets earned interest at an effective annual rate of 6.9 percent. This interest income provided 11 percent of total combined trust fund income. For 2000, $0.8 billion was transferred from the DI Trust Fund to the general fund of the Treasury to adjust past reimbursements for the cost of noncontributory wage credits for military service prior to 1957. This adjustment is shown as an offset to income in table II.B1.

Over 98 percent of expenditures from the combined OASI and DI Trust Funds in 2000 went to pay retirement, survivor and disability benefits totaling $407.6 billion. The financial interchange with the Railroad Retirement program resulted in a payment of $3.7 billion from the combined OASI and DI Trust Funds in 2000, or about 0.9 percent of total expenditures. The administrative expenses of the Social Security program were $3.8 billion in 2000, or about 0.9 percent of total expenditures in the year.

Invested assets of the trust funds increased by $153.3 billion in 2000 because income to each fund exceeded expenditures, as shown in table II.B3.

Note: Totals do not necessarily equal the sums of rounded components.

The assets of a trust fund provide a reserve that can be used to pay benefits in years when expenditures exceed income due to, for example, a temporary downturn in the economy. Such reserves allow for time to enact legislation to correct unanticipated shortfalls, when needed, without disruption of the timely payment of benefits. At the end of 2000, the combined assets of the OASI and the DI Trust Funds were 239 percent of estimated expenditures for the following year.

¹ The Medicare Hospital Insurance Trust Fund receives the additional revenue from taxing up to 85 percent of benefits.

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