The Congressional Budget Office (CBO) recently released a report revealing that spending on Social Security and Medicare is projected to double by 2033. This would lead to the two programs representing 10 percent of the country’s total economic output, with Social Security spending increasing from $1.2 trillion in 2022 to $2.4 trillion by 2033. Medicare spending is set to grow from $710 billion in 2022 to over $1.6 trillion by 2033.
The budget office also found that the federal deficit for 2023 is $1.4 trillion, which amounts to 5.3% of GDP. It is predicted that the federal deficit will rise to 6.9% of Gross Domestic Product (GDP) by 2033, a much larger proportion than the average of the last 50 years, which was 3.6% of GDP. The CBO estimates that the federal debt — currently capped at $31.4 trillion — is on pace to balloon to roughly $50 trillion a decade from now, if no action is taken.
High inflation was identified as a major driver of this increase in Social Security spending. This year, Social Security enacted an 8.7 percent cost-of-living increase, its largest in decades. The CBO estimates this will lead to a $412 billion increase in Social Security spending over the next decade.
The potential insolvency of the Social Security trust fund is a major cause of concern for beneficiaries, as it could result in a more than 20 percent reduction in benefits if no action is taken. President Joe Biden has proposed raising taxes on high earners to shore up Social Security’s finances and increase benefits for some retirees. Meanwhile, Republican leaders have ruled out proposals to link the debt limit fight to entitlement reforms and instead shifted their attention to discretionary funding hashed out by Congress every year.
0. “Budget report shows Social Security unsustainable, national deficit to drastically increase this decade” FISM TV, 16 Feb. 2023, https://fism.tv/budget-report-shows-social-security-unsustainable-national-deficit-to-drastically-increase-this-decade/
1. “CBO on Medicare and Social Security | Cato at Liberty Blog” Cato Institute, 15 Feb. 2023, https://www.cato.org/blog/cbo-medicare-social-security
2. “CBO warns of sharp uptick in Social Security, Medicare spending” Yahoo News, 15 Feb. 2023, https://news.yahoo.com/cbo-warns-sharp-uptick-social-214151880.html
3. “New forecasts show Medicare and Social Security spending growth rapidly outpacing the growth in federal tax …” The Boston Globe, 15 Feb. 2023, https://www.bostonglobe.com/2023/02/15/nation/new-forecasts-show-medicare-social-security-spending-growth-rapidly-outpacing-growth-federal-tax-revenues-over-next-10-years
4. “Social Security Funds Will Run Out Earlier Than Predicted, Government Report Says” CNET, 17 Feb. 2023, https://www.cnet.com/personal-finance/social-security-funds-will-run-out-earlier-than-predicted-government-report-says/
5. “Risk of shortfall raises stakes in Social Security fight” The Hill, 17 Feb. 2023, https://thehill.com/homenews/senate/3862226-social-securitys-new-funding-timeline-gives-senate-some-heartburn/