by Congressional Budget Office Director Phillip Swagel discusses Biden’s plan to address Social Security’s insolvency in his federal budget proposal on ‘Cavuto: Coast to Coast.’
Social Welfare It is on a fiscal trajectory that could cut benefits by about 25% a decade from now if Congress fails to act, the director of the nonpartisan Congressional Budget Office (CBO) said Monday.
Appearing on Fox Business Network on “Coast to Coast Cavuto” CBO Director Phillip Swagel explained to host Neil Cavuto, “And this is the challenge, I will say first that the Social Security Trust Fund is exhausted in 2032 in our projections. So benefits will be reduced by around 25% after that time. So you don’t save Social Security if you don’t do anything.”
One hour The main Social Security trust fund, the Old Age and Survivors Insurance Trust Fund, is exhausted, the program will have to rely on incoming payroll tax receipts and will automatically be required to reduce payments to beneficiaries below their current levels. Swagel said the federal government would need “about an additional $250 billion to maintain benefits just within the next decade, and over the next decade it will be $8 trillion.”
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Phillip Swagel, director of the nonpartisan Congressional Budget Office, told FOX Business’ Neil Cavuto that once the Social Security Trust Fund is exhausted in 2032, benefits would be cut by 25% unless Congress acts. ((Photo illustration by Kevin Dietsch/Getty Images) / Getty Images)
“So that’s the hole, it’s $250 billion, then $8 trillion just to keep the current benefits,” said Swagel. “If the president wants to expand benefits, that would be an additional cost.”
President Joe Biden He plans to begin rolling out his budget plan this week, which is expected to include Social Security provisions. The President’s budget proposals are rarely adopted and in most cases serve primarily as a framework for Congress, the CBO, and non-governmental budget bodies to analyze the nation’s finances through a different lens based on the policy recommendations being made. present.
Swagel discussed how the CBO analyzes policy options to reduce the budget deficit – including for programs such as Social Security and Medicare – involving tax increases or spending reductions to provide options for lawmakers to consider, although the agency does not make recommendations as a nonpartisan entity.
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Social Security faces a $250 billion hole to maintain benefits over the next decade, rising to $8 trillion in the decade after that.
Swagel noted that the CBO options Social Security reforms included policy options to ease the impact on Americans nearing retirement age who may start receiving benefits early and give those who will be affected more time to plan.
He emphasized that “the longer you wait to make the adjustments, because the more difficult the problem becomes, the more expensive and dyeing the adjustments will end up being.”
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In 1950, Social Security had 16 workers for every beneficiary – but that ratio has narrowed to 2.8 workers for every beneficiary as of 2022 and is expected to further decrease to 2.3 by 2035.
“That’s really the message of our report, that the current path is not sustainable, that the chances of us having any problems on the fiscal side are very little, none – so action needs to be taken,” said Swagel.
Cavuto noted that 16 people were paying into Social Security for every recipient and that the math is getting closer to 1-to-1. In fact, data from the Social Security Administration (SSA) shows that the ratio in 1950 was 16.5 workers for every beneficiary before falling to about 3.3 workers per beneficiary where it remained from the 1970s until 2010 when it fell it to 2.9.
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As of 2022, SSA estimated that there were 2.8 workers per beneficiary and the Social Security Trustee projects that, given America’s aging population, it will further decrease to 2.3 by 2035.
“That’s the challenge we face: We have a demographic change. We’re aging as a society and that affects Social Security and Medicare,” explained Swagel. “And then health care 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 health care, more health care spending . And so that’s driving our fiscal imbalance, along with higher interest. The interest payments that we’re facing as a nation are also going up a lot.”
Thomas Anderson of Fox Business contributed to this report.
