In its “Budget and Economic Outlook: 2023 to 2033” report, the CBO adjusted the timeline for when the Old-Age and Survivors Insurance Trust Fund, which pays out retirement and survivor benefits, would be exhausted.
The timeline was shortened to 2032 in the latest report, with the estimate a year sooner than expected. Experts said it’s the first time in decades the potential exhaustion date is within the 10-year budget window.
A key contributor to the updated timeline, CBO Director Phillip Swagel said, is the increase in the cost-of-living adjustment (COLA), which is raised automatically, as the nation continues to grapple with high inflation.
“That’s the main driver of the change in the financial status of the Social Security trust fund,” he said this week. “There was high inflation and that resulted in a high COLA and then those benefits affect the solvency of the trust fund.”
Absent changes in policy, Swagel warned that beneficiaries “would see a reduction in their benefits of more than 20 percent,” and federal spending for entitlement programs are expected to see a dramatic increase over the next decade.
Interest has grown among lawmakers in both chambers around potential fixes to help shore up solvency for Social Security, 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 possible entitlement reforms, there has been talk in the House GOP conference of forming a commission to explore potential recommendations.
Read more on the CBO estimates at TheHill.com.
