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September 02, 2020 at 05:14 PM
The Congressional Budget Office is projecting that the Social Security Trust Fund for seniors will be depleted in 2031, three years earlier than the fund’s trustees had projected in May and one year earlier than the CBO had projected last year.
After funds are depleted, benefits will continue because they are also financed by payroll taxes, but they will decline unless changes are implemented to build up the trust fund’s reserves.
The CBO is also projecting that Medicare’s Hospital Insurance Trust Fund will be depleted in 2024, two years earlier than the fund’s trustees and the CBO had projected earlier this year, and that the Social Security Disability Insurance trust fund will be depleted in 2026.
Over the 10 years ended in 2030, the CBO is projecting a cumulative deficit for these trust funds plus the Highway Trust Fund of $2.3 trillion, 6% larger than the $2.2 trillion it had estimated in January.
If President Donald Trump is re-elected and ends payroll deductions for Social Security and Medicare, as he has threatened to do, both programs would not just reduce their benefits but also end them unless some other source of funding were implemented.
Debt vs. GDP
In a second report released Wednesday, the CBO projects that for the first time since 1946 total federal debt in 2020 will almost equal the nation’s total economic output. In 2021, the debt burden is expected to exceed the annual GDP level.
The CBO projects that debt held by the public will reach $21.9 trillion in the fiscal year ending September 2021, will be equivalent to 104.4% of gross domestic product, up from 98.2% in this fiscal year, which ends on Sept. 30. By the end of 2030, the U.S. debt is estimated to increase to $33.5 trillion, equivalent to 109% of GDP.
