Social Security will run out of money in 8 years. Is anyone paying attention?
There aren’t many voices left in American politics that you can trust. These days it feels like we are all wading neck-deep in p********a and bilge. So it’s always good to hear from one of the few sources that is nonpartisan, independent and authoritative.
The Congressional Budget Office has only one job, though it’s plenty: To help everyone in Congress, on both sides, count the beans. Happily, their reports are also available to the rest of us.
Last week, Molly Dahl, the CBO’s chief of long-term analysis, went before the Senate Budget Committee and told them clearly and emphatically that Social Security is going to run out of money in just eight or nine years, unless they actually do something about it.
The Social Security trust fund will run out of cash “in fiscal year 2033,” Dahl told senators. As fiscal years in Washington start on Oct. 1 of the previous calendar year, she is referring to the 12-month period starting Oct. 1, 2032.
In other words, in just over eight years’ time.
Nothing to see here, folks. Move along.
Thank heavens in this e******n we are talking about cats and dogs in Springfield, Ohio, and how Taylor Swift is voting. I’d hate it if the really serious issues got overlooked.
Social Security’s financial crisis can be delayed for about a year by stealing cash from the federal Disability Insurance trust fund to prop it up, Dahl said. But even that won’t delay the crisis by much. “If the two trust funds were combined, their balance would be exhausted in fiscal year 2034,” she told senators.
And fiscal year 2034 starts in October 2033 — just over nine years’ time.
Without a change in the law, Social Security benefits would have to be cut by 25% across the board in 2034. If they raid the disability fund, and delay the crisis for a year, the benefits will still have to be cut by 23% in 2035.
Granted, these are not cuts from today’s levels, but from the benefit levels forecast for 2034 or 2035, which would be higher than today because of wage growth in the economy. Nonetheless, it’s a crisis.
This is not an isolated situation. Social Security is part of a broader financial disaster rolling across the United States government, one which is being heroically ignored by both political parties.
The black holes in Social Security, Medicare Part A and Medicare B, C and D, in total, add up to over $78 trillion, or about 280% of gross domestic product (see page 209 of the most recent Medicare trustees’ annual report). That’s the gap between what our retirement programs will need to pay out and what they are expected to bring in through dedicated payroll taxes, premiums and so on.
Meanwhile, the official U.S. national debt is now $28 trillion — equal to 100% of gross domestic product for the first time since shortly after World War II.
At the moment, Uncle Sam is borrowing another $1 trillion every six months, even at a time when unemployment is low and the economy is growing. The CBO expects that to continue for the next decade, at which point national debt will hit $50 trillion, or more than four times what it was when B****k O***a left office in January 2017.
Meanwhile, people on the campaign trail — one in particular — are promising to cut people’s taxes. Including (especially) for those making more than $400,000 a year.
Here are two simple forecasts: Spending will have to be cut, and taxes will have to rise (at least for some). Something which cannot continue indefinitely, won’t.
