Finding trustworthy and objective information sources has grown more challenging in the current political environment. It can be difficult to tell fact from fiction because of the pervasiveness of partisan agendas and false narratives.
The Congressional Budget Office (CBO), a nonpartisan organization that supplies all sides of Congress with vital economic data and analysis, is one of the few reliable, independent voices that remain.
The CBO’s mission is simple but important: to provide an unbiased, fact-based assessment of the government’s financial situation.
Molly Dahl, the chief of long-term analysis at the CBO, recently testified before the Senate Budget Committee. Dahl issued a dire warning regarding the future of Social Security in her testimony.
She said the Social Security trust fund is headed toward depletion by fiscal year 2033 unless Congress do action. This prediction basically indicates that the fund would run out by late 2032 or early 2033—just over eight years from now—because fiscal years in the federal government start on October 1 of the prior calendar year.
Dahl continued his testimony after that. She added that the government would only postpone the inevitable depletion by around a year even if it were to temporarily reallocate cash from the federal Disability Insurance trust fund.
The depletion date would be moved to fiscal year 2034 if the two funds were combined, leaving Congress with just one more year to take action.
However, the fact remains that Social Security payouts will have to be reduced by almost 25% starting in 2034 if no legislative action is taken. Even while the cuts would be somewhat less drastic, they would still total around 23% by 2035 if they were successful in combining the trust funds.
It’s vital to remember that these cuts would likely come from the higher benefits in 2034 or 2035, which are anticipated to rise as a result of overall economic wage growth, rather than from the benefit levels that exist today.
Nevertheless, millions of retirees, many of whom depend on Social Security as their main source of income, would face significant challenges as a result of these reduction.
Concerning factors other than Social Security
One aspect of a more significant and concerning financial picture is the impending Social Security catastrophe. The United States’ financial problems go well beyond retirement benefits.
Another important concern is Medicare in particular. Dahl’s caution on Social Security reflects worries about the financial stability of Medicare, particularly Part A and Parts B, C, and D.
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According to the annual report of the Medicare trustees, the total unfunded liabilities in Social Security and Medicare total more than $78 trillion, or almost 280% of the country’s GDP.
Another concerning element of the nation’s larger financial problems is the national debt itself. For the first time since the post-World War II era, the U.S. government currently owes about $28 trillion, which is equivalent to the country’s total GDP.
This debt is still increasing quickly. The federal government is borrowing $1 trillion every six months, despite low unemployment and economic progress. According to CBO projections, the national debt may reach $50 trillion in the next ten years if this borrowing is allowed to continue unchecked.
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All of this is taking place as tax cuts, especially for the wealthiest Americans, are still being promised.
Given the nation’s grave financial situation, a prominent political figure has proposed decreasing taxes for individuals making over $400,000 per year, which appears counterintuitive.
The harsh reality will eventually have to be accepted: either taxes must be raised, spending must be drastically cut, or perhaps both must be done.
The numbers just don’t stack up to keep things the way they are. Without considering the long-term viability of important social safety nets like Social Security and Medicare, the federal government cannot keep piling up debt.