In today’s political landscape, it has become increasingly difficult to find reliable and unbiased sources of information. The overwhelming presence of partisan agendas and misleading narratives often makes it challenging to distinguish fact from fiction. However, there are still a few trusted, independent voices left, and among these is the Congressional Budget Office (CBO), a nonpartisan entity that provides crucial economic data and analysis to both sides of Congress. The CBO’s purpose is singular but significant: to offer an objective, fact-based analysis of the government’s finances.
Recently, the CBO’s chief of long-term analysis, Molly Dahl, appeared before the Senate Budget Committee. In her testimony, Dahl presented a stark warning about the future of Social Security. According to her, unless lawmakers intervene, the Social Security trust fund is on track to be depleted by fiscal year 2033. To clarify, fiscal years in the federal government begin on October 1 of the previous calendar year, so this forecast essentially points to the fund running out by late 2032 or early 2033—just over eight years from now.
Dahl’s testimony didn’t stop there. She further explained that even if the government were to temporarily redirect funds from the federal Disability Insurance trust fund, it would only delay the inevitable depletion by about a year. Combining the two funds would push the exhaustion date to fiscal year 2034, giving lawmakers only an additional year to act. But regardless, the unavoidable reality remains: if no legislative action is taken, Social Security benefits will have to be cut by around 25% beginning in 2034. If they do manage to combine the trust funds, the cuts, while slightly less severe, would still amount to around 23% by 2035.
It’s important to note that these reductions wouldn’t necessarily be cuts from today’s benefit levels, but rather from the projected higher benefits in 2034 or 2035, which are expected to increase due to overall economic wage growth. Even so, these cuts would present a serious problem for millions of retirees, many of whom rely on Social Security as their primary source of income.
Other worrisome aspects than Social Security
This looming Social Security crisis is just one piece of a larger and more troubling financial picture. The fiscal challenges facing the United States extend far beyond retirement benefits. Medicare, in particular, is another significant issue. Dahl’s warning about Social Security mirrors concerns about Medicare’s financial health, especially Medicare Part A and Parts B, C, and D. Combined, the unfunded liabilities in Social Security and Medicare add up to over $78 trillion—an amount equivalent to nearly 280% of the nation’s gross domestic product (GDP), as cited in the Medicare trustees’ annual report.
The national debt itself is another alarming aspect of the country’s broader financial woes. Currently, the U.S. government owes approximately $28 trillion, an amount equal to the entire GDP of the nation for the first time since the post-World War II era. This debt continues to grow rapidly. Despite low unemployment and economic growth, the federal government is borrowing at a rate of $1 trillion every six months. The CBO projects that if this borrowing continues unchecked, the national debt could reach $50 trillion within the next decade.
This is all happening in an environment where tax cuts are still being promised, particularly for the wealthiest Americans. One notable political figure has suggested lowering taxes for those earning over $400,000 annually, a proposal that seems contradictory given the country’s dire financial circumstances.
At some point, the hard truth will have to be faced: either spending will have to be significantly reduced, or taxes will need to be increased, or possibly both. The numbers simply don’t add up for things to continue as they are. The federal government cannot endlessly increase its debt while ignoring the long-term solvency of key social safety nets like Social Security and Medicare.