CBO Weighs In on Insolvency Projections - epicforamerica.org
Although the official 2026 Social Security Trustees Report is still weeks away, most insolvency forecasts have been centered on 2032 as the date of full depletion for the program’s trust fund reserves. The Congressional Budget Office (CBO) recently cemented this date, along with a projection that the benefit cut accompanying full depletion would be 28%. Reporting for the Economic Policy Innovation Center (EPIC), Visiting Fellow in Workforce, Rachel Greszler, analyzes the CBO’s updated 2026 Budget and Economic Outlook data in a post on the EPIC website. Click here to read Ms. Greszler’s post.
Ms. Grezler’s post provides examples of insolvency’s impact on several hypothetical beneficiaries, illustrating the financial effects of the 28% across-the-board reduction. Her post also provides a clear illustration of the program’s financial trajectory over the 2026 – 2036 period, and adds commentary on the priorities lawmakers should consider in addressing the problem.
A Brief Retrospective on the Insolvency Issue
If Social Security’s trust fund reserves were fully depleted, benefits would need to revert to a cash basis, in which benefits paid must equal revenues received. The reality of this situation puts program beneficiaries at risk of severe consequences in about six years. This shift to cash-in/cash-out is projected to result in the substantial, across-the-board reduction Ms. Grezler cites in her analysis.
Despite the potential for this catastrophic event, Congress can restore Social Security’s Solvency if lawmakers act swiftly, as they did in 1983 when faced with a similar dilemma. It is imperative that corrective action be undertaken as far in advance of full trust fund depletion as possible to minimize disruption. While immediate action is critical, so too is adopting the best long-term solution.
The Social Security Administration has evaluated hundreds of proposals in recent years, and a steady stream of ideas has emerged to modify the program for the 21st-century economy. It’s anybody’s guess on the timeline for congressional action, but most analysts understand that this is not a self-correcting problem, and action is needed sooner rather than later.