W&M Works to Solve Social Security’s Solvency Challenge
Today, the Ways and Means Social Security Subcommittee, chaired by Rep. Sam Johnson (R-TX), held a hearing on the financial health of the federal government’s biggest program: Social Security. While it’s widely known the program’s costs are exceeding its revenues, experts differ on when the program’s funds will be exhausted—and when millions of Americans who have paid into Social Security could be affected. At the hearing, Members discussed how the Congressional Budget Office (CBO) and Social Security’s Trustees (the Trustees) evaluate the long-term solvency of the program and what those two projections mean as Congress works to fix the problem.
According to the latest reports, CBO projects Social Security would not be able to pay full benefits starting in 2029, five years earlier than the Trustees project. Today’s hearing is the first time in years the two organizations have publicly come together to talk about the differences in their projections.
Explaining why this conversation is so important, Chairman Johnson said:
“We all know Social Security is in trouble but just how much depends on who you talk to. Seventy-five year estimates aren’t ever going to be perfect. Having CBO and the Trustees so far apart does raise questions and rightfully so. Congress relies on these well-respected experts to give us the best information so we an make decisions on the best ways to strengthen Social Security for our children and grandchildren so they can count on it just like seniors and individuals with disabilities do today.”
The two organizations consider many of the same demographic and economic factors that directly and indirectly affect Social Security’s costs and revenues. These factors include life expectancy, inflation, labor force participation, and earnings levels. But the two organizations make different assumptions about this information.
For example, CBO assumes there will be lower fertility rates and faster improvements in mortality than the Trustees assume. Conversely, the Trustees do not respond quickly to annual data when thinking about long-term projections, while CBO updates its projections to incorporate new research and feedback each year.
As Rep. Tom Rice (R-SC) explained, without a clear projection of when Social Security’s funds will be exhausted, it’s hard for Congress to come together to fix the problem. He said:
“It’s just math. We’ve got less money coming in than going out in the long run, and that money will run out eventually. And so people’s benefits will have to be reduced unless we do something … I’m very hopeful that this Committee, through these hearings, is preparing to offer a plan to solve this problem … But if we have CBO and we have the Social Security Actuaries differing on the numbers so that we don’t know exactly what target we need to hit, that obviously makes the problem a little more difficult. A lot more difficult.”
“I really hope that you can sit down together and pull a little closer on exactly what that will take. Because when we come up with our solutions and put those on the table … we sure don’t want to have to revisit this in just a few years. Once we resolve it, let’s get it resolved and put it to bed.”
Ways and Means Members will continue to learn more about the challenges facing Social Security as they work to strengthen the program for the long term.
CLICK HERE to learn more about today’s hearing.