CBO Report: Social Security & Medicare Spending Expected to Double by 2033
The Congressional Budget Office (CBO) recently released its annual Budget and Economic Outlook report, revealing that federal spending on Social Security and Medicare is projected to almost double by 2033. This comes as a concerning development and has put new pressure on Congress to address accelerated threats of insolvency for these programs.
The CBO report found that Social Security spending is projected to grow from $1.2 trillion in fiscal 2022 to almost $2.4 trillion in 2033, representing more than 10 percent of the country’s total economic output. Starting right away, fiscal 2023 will see a jump of $123 billion, a 10% rise, mostly because of the 8.7% cost-of-living raise for Social Security recipients that became effective last month.[0] Additionally, the federal deficit for 2023 is $1.4 trillion, amounting to 5.3% of GDP.[1] The federal debt is expected to swell to 6.9% of GDP by 2033, far above the typical average over the past 50 years.[0]
CBO Director Phillip Swagel revealed that the Social Security trust fund will become insolvent in 2032 — two years sooner than the previous prediction — and that Medicare is projected to experience a funding shortfall in 2028. This has prompted calls for immediate reforms to Social Security and Medicare as part of this year’s coming budget debates from budget watchdogs. [0]
President Joe Biden’s administration has proposed raising taxes on high earners by eliminating the Social Security tax cap for incomes above $400,000 a year, subjecting them to payroll taxes.[2] Democrats have also floated a series of tax hikes on the wealthiest taxpayers to cover the shortfalls.[0]
Meanwhile, Republican leaders have sought to quell concerns about reforms to the popular program, ruling out proposals to link the debt limit fight to entitlement reforms.[2] If the Social Security funds become insolvent and there is no change to current laws, beneficiaries would see a more than 20 percent reduction in their benefits, according to Swagel.
Maintaining Social Security and Medicare is a contentious issue, and this week’s report from the CBO serves to underscore the importance of addressing the shortfall and finding a workable solution.
0. “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
1. “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/
2. “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
