In its report, “Budget and Economic Outlook: 2023 to 2033,” the CBO adjusted the exhaustion schedule for the Old Age and Survivors’ Insurance Trust, which pays out retirement and survivor benefits.
The schedule was shortened to 2032 in the last report, with the estimate a year earlier than expected. Experts said it’s the first time in decades that the potential exhaustion date is within the 10-year budget window.
An important contribution The updated schedule, said CBO director Phillip Swagel, is the increase in the cost of living adjustment (COLA), which will be raised automatically as the nation continues to grapple with high inflation.
“That is the main reason for the change in the financial status of the Social Security Trust Fund,” he said this week. “There was high inflation and that led to high COLA, and then those benefits affect the ability of the trust to pay.”
Without policy changes, Swagel warned that beneficiaries “would see a reduction in their benefits more than 20 percent‘, and federal spending on eligibility programs is projected to increase dramatically over the next decade.
Legislators in both houses have become more interested in possible solutions to strengthen Social Security’s solvency, particularly as a high-stakes battle over the nation’s debt limit heats up on Capitol Hill.
While Republican leaders have pushed back on proposals to tie the debt limit to potential entitlement reforms, the House GOP conference has been talking about forming a commission to consider potential recommendations.
Read more about the CBO estimates at TheHill.com.
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