The head of the Congressional Budget Office, Phillip Swagel, said this week that Social Security funds may start running out by 2032, or a year earlier than previously expected by the CBO.
Swagel made reference to last year’s decision from the Social Security Administration to make an 8.7 percent cost-of-living adjustment (COLA) for 2023’s Social Security payments. The administration hiked the COLA due to decades-high inflation, which soared to over 9 percent during a period last year.
Other Details
Future problems with the fund have long been predicted, largely because of demographic shifts. As birthrates decline, fewer people become workers, resulting in fewer payments of payroll taxes.Meanwhile, more Baby Boomers are retiring and collecting Social Security. According to the latest Social Security and Medicare trustees report, released in June, the fund will no longer be able to pay full benefits beginning in 2035.
When the Social Security trust fund is depleted, the government will still be able to pay 80 percent of scheduled benefits for an indefinite amount of time, the Social Security trustees report said, while Medicare will be able to pay closer to 90 percent of scheduled benefits. That means, if nothing changes, future generations can expect to see a 20 percent across-the-board reduction in payments, with a 10 percent reduction in Medicare coverage.
After the COLA increase last year, William Arnone, CEO of the National Academy of Social Insurance, told The Associated Press that “the two economic enemies of the trust fund are high inflation and low employment, meaning not only high unemployment but low wages.”
Recent Activity
Republicans and Democrats have proposed a variety of policy fixes. The last time legislation was passed to address Social Security’s future was in 1983, AP notes.Sen. Rick Scott (R-Fla.), who has taken fire from both Republicans and Democrats, recently released an opinion article saying that he doesn’t propose a cut to either Medicare or Social Security.
“Note to President Biden, Sen. Schumer and Sen. McConnell—As you know, this was never intended to apply to Social Security, Medicare, or the U.S. Navy,” Scott wrote for Washington Examiner, addressing Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.).
“I have never supported cutting Social Security or Medicare, ever. To say otherwise is a disingenuous Democrat lie from a very confused president. And Sen. Mitch McConnell (R-Ky.) is also well aware of that. It’s shallow gotcha politics, which is what Washington does,” Scott added.
It came as former President Donald Trump this week cautioned Scott on potential cuts.
The former commander-in-chief added: “Be careful, Rick, and most importantly, fight for Social Security and Medicare. THERE WILL BE NO CUTS!”
