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2h ago

CBO Moves Social Security Insolvency Date to 2032, Warning of Automatic Benefit Cuts

The updated forecast compresses the window for Congress, with benefits capped at payroll-tax income unless lawmakers change the law.

Stock image/file photo: Social Security card with U.S. dollar bills.

Overview

  • If no legislation passes, benefits would fall about 7% in fiscal 2032 and average roughly 28% a year from 2033 to 2036, the CBO projects.
  • Because the OASI trust fund cannot borrow, payments would be limited to incoming payroll and related tax receipts, and the specific mechanism for reductions is not defined in statute.
  • The CBO estimates real GDP would be about 0.7% lower in 2033 and that 10-year Treasury yields would be about 0.4 percentage points lower following the cuts.
  • The Social Security Administration pays monthly benefits to more than 70 million people, and an illustrative analysis by the CRFB estimates a typical couple age 60 today would lose about $18,400 a year at insolvency under a 24% cut scenario.
  • Proposals under discussion include the Fair Share Act to tax earnings above $400,000 and a bipartisan Cassidy–Kaine plan to seed a $1.5 trillion Treasury-backed investment fund for the program.