Clock is ticking on Congress to fix Social Security

The time Congress has to shore up Social Security’s finances is running out even faster than anticipated.

It has just eight years left to figure out a solution to address a looming budget shortfall that could lead to the slashing of benefits for tens of millions of retirees that rely on the program for income.

An annual trustees report released Wednesday said Social Security is now expected to run out of money nine months earlier than expected, pushing the timeframe Congress needs to implement a solution up to 2033 or risk a 23% benefit cut to the roughly 61 million Americans who collect payments.

Without any changes, today’s 59-year-old workers will receive just 77% of their scheduled benefits.

Both Democrats and Republicans have declared they will not let the popular entitlement programs fall into insolvency and would be protected, but they have rarely taken up legislative proposals to address the problem.

GOP-led proposals to shore up the program generally revolve around increasing the retirement age, while Democrats have pushed to increase the payroll tax that finances benefits.

The issues with the program’s long-term solvency have been known for decades but have not created enough urgency among lawmakers to act. All the remedies to shore up its budget shortfalls — raising taxes, increasing the retirement age and lowering benefits — are political losers quickly targeted for criticisms as both parties accuse each other of damaging the popular entitlement program.

The response to this past week’s outlook on their finances followed a familiar pattern with lawmakers vowing to protect the programs while blaming the opposing party for the dire circumstances.

“This week’s report makes clear how much we need pro-growth tax and economic policies that unleash our nation’s growth, increase wages, and create new jobs to help strengthen these Trust Funds for those who rely on them and to protect them for generations to come,” said Rep. Jason Smith, R-Mo., who chairs the House Ways and Means Committee that runs oversight of Social Security. “The ‘One Big Beautiful Bill’ would do just that and also provide much-needed additional relief to America’s seniors who struggled for four years in the Biden economy.”

Democrats have said that+ Republicans are seeking to damage Social Security by slashing the agency’s workforce in broader government workforce cuts and pointed to proposals to raise the retirement age or privatize the fund — ideas that have not taken off as consensus within the GOP — as evidence.

“Republicans have made their goals clear: undermine trust in Social Security, sabotage its administration, and hand it over to their Wall Street allies for profit.” Rep. Richard Neal, D-Mass., said in a statement. “But Democrats won’t let that happen. We will never stop fighting to defend and strengthen Social Security and Medicare for every worker, every retiree, and every generation to come”

The finger-pointing is reminiscent to the long-running partisan dispute that has been part of the struggle to repair the declining financial status of the programs.

“There’s very little room for negotiation, period. There’s virtually no cross-party negotiation. There’s not a lot of real searches for solutions and that’s problematic. A lot of searches for blame, not a lot of searching for solutions,” said Rob Alexander, a political science professor at Bowling Green State University in Ohio.

The main issue threatening its solvency is changing demographics with lower birthrates meaning less workers to pay into Social Security and Medicare while an increasing share of the baby boomer generation retires and collects benefits.

Trustees are expecting birthrates to remain lower for longer, limiting the amount of future revenue taken in to help finance it.

The amount of payroll taxes, the main source of revenue to finance Social Security, is also limited and only applied up to $176,100 in income. There have been proposals in recent years to expand the cap to collect more revenue to finance benefits, but none have been passed.

The longer Congress waits to act, the more severe the consequences to shore up the finances will be. Analysts have also said it will make it more likely they will need to dip into general funds to keep the programs whole, which would be a significant change from how Social Security has operated since its inception.

Social Security and Medicare are also deeply popular with the American public among voters of all partisan makeups.

Older Americans, who collect on benefits and are also most likely to cast a ballot, place it highest on their list of priorities.

“This is not one of those topics that slip through the cracks for people, and they will put a lot of pressure on legislators if they fear there’s any sense that their entitlements will be gone in some way,” said Alexander, also the founding director of the BGSU Democracy and Public Policy Research Network. “When you throw an entitlement out there, it’s something that somebody has and it’s really hard to take away something that already exists. It’s much harder to get rid of something once they have it.”

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