Social Security is speeding toward a fiscal cliff that could potentially result in benefits being slashed by approximately 25% roughly a decade from now if Congress doesn’t take action to stop it, according to the director of the Congressional Budget Office (CBO).
(Video Credit: Fox Business)
CBO Director Phillip Swagel made his comments Monday on Fox Business Network’s “Cavuto Coast to Coast.”
He told host Neil Cavuto, “And this is the challenge, I’ll say first is that the Social Security Trust Fund is exhausted in 2032 in our projections. So benefits will be reduced by about 25% after that time. So doing nothing doesn’t save Social Security actually.”
According to Fox Business, “Once Social Security’s major trust fund, the Old-Age and Survivors Insurance Trust Fund, is exhausted, the program will have to rely on incoming payroll tax receipts and be automatically required to reduce payments to beneficiaries below their current levels. Swagel said the federal government would ‘need about an additional $250 billion to keep benefits just within this decade, and in the next decade it’s $8 trillion.'”
“So that’s the hole, it’s $250 billion, then $8 trillion just to keep the current benefits,” Swagel reiterated. “If the president wants to expand benefits, well that would be an additional cost.”
That remark was made evidently in reference to President Biden’s anticipated rollout of his budget blueprint this week. The plan is expected to include Social Security provisions. It is doubtful they will be adopted out of hand but the provisions will be considered by Congress, the CBO, and non-governmental budget watchdogs while they analyze the nation’s finances.
Choosing to do nothing guarantees a massive 24% cut to Social Security benefits.
We’re choosing to fix Social Security so that people who are on it now don’t get that cut. pic.twitter.com/lWHfgmJPqr
— U.S. Senator Bill Cassidy, M.D. (@SenBillCassidy) March 4, 2023
“Swagel discussed how the CBO analyzes policy options for reducing the budget deficit – including for programs like Social Security and Medicare – that involve tax increases or spending reductions to provide lawmakers with options to consider, though the agency doesn’t make recommendations as a nonpartisan entity,” Fox Business reported.
“Swagel noted that the CBO’s options for Social Security reforms included policy options to mitigate the impact on Americans who are close to retirement age and may begin receiving benefits soon and give those who will be affected more time to plan,” the network added.
The director noted that “the longer you wait to make the adjustments, well, the more difficult the problem becomes, the more costly and more wrenching are the eventual adjustments.”
“That’s really the message of what our report says, that the current path is not sustainable, the odds that we’re going to have no problems on the fiscal side are just vanishingly small, they’re zero – so action must be taken,” Swagel warned.
The people don’t crave common sense. They want someone to lie to them and tell them everything is ok.
For example: Social Security and Medicare will shatter this nation. That’s not even an opinion. That’s math. Neither party will talk about it cause it’s election death. https://t.co/Dp8AGs9Aev
— Jesse Kelly (@JesseKellyDC) February 27, 2023
Cavuto recounted that when Social Security was in its infancy, it had 16 people paying in for every recipient. Now that math is closer to 1-to-1.
Data from the Social Security Administration (SSA) indicates that in 1950 the ratio was 16.5 workers for every beneficiary. It then declined to approximately 3.3 workers per beneficiary where it remained from the 1970s until 2010 when it dropped to 2.9.
The SSA estimated in 2022 that there were 2.8 workers per beneficiary and that considering America’s aging population, the Social Security Trustees project will decline further to 2.3 by 2035.
“That’s the challenge we face: We have demographic change. We’re getting older as a society and that affects Social Security and Medicare,” Swagel elaborated, not expounding on the fact that Americans put their money into the fund for their retirement and now it is gone.
“And then healthcare costs are growing faster than the economy, faster than the price of other things. And with an aging society, we’re going to need more healthcare, more healthcare spending. And so that is driving our fiscal imbalance, along with higher interest. The interest payments we face as a nation are rising sharply as well,” Swagel admonished.
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