For SSI, an appropriate relative measure of program costs is produced by comparing estimated annual SSI costs to the
Gross Domestic Product (GDP)1. In addition to providing an inflation-independent measure of the cost of the SSI program, this provides a useful perspective on the proportion of the total output of the U.S. economy needed to provide Federal SSI benefits. As is shown in table
IV.D1 and figure
IV.D1, the total cost of the SSI program relative to GDP is projected to be relatively constant through 2012 and decline thereafter.
Table IV.D1 and figure
IV.D1 present historical and projected Federal expenditures under the SSI program as a percentage of GDP. Following the initial higher costs of the program, total Federal SSI payments during the 1980s were a fairly constant percentage of GDP (0.21 percent). During the early 1990s, SSI experienced rather rapid growth (to 0.34 percent of GDP in 1996) due to a combination of factors discussed earlier in section IV. Legislation enacted in 1996
2 resulted in a drop in the cost of SSI as a percentage of GDP beginning in 1997 and continuing through 2000. The share of GDP devoted to Federal SSI expenditures increased slightly after the turn of the century in part in response to a slowdown in economic growth over that period, but resumed its very gradual downward trend from 2002 to 2007 due to relatively slower growth in the number of SSI recipients. Beginning in 2008, however, this trend was reversed due to an increase in program recipients described in earlier sections. As the economy begins to recover, the gradual downward trend is projected to resume. As described in last year’s report, this ultimate trend is the net effect of two factors. First, Federal SSI expenditures, after adjusting for growth in prices, are projected to grow slightly faster than the population due to some estimated growth in the SSI recipient population as a percentage of the overall U.S. population, as discussed previously in section IV.C. Second, in years beyond the current economic downturn, the real growth projected for GDP under the 2010 Trustees Report intermediate assumptions is greater than the effect of these projected increases in SSI recipients. Accordingly, Federal SSI payments are projected to decline as a percentage of GDP over the remainder of the projection period, reaching 0.25 percent of GDP by 2034.
