Growing Social Security Costs Will Help Fuel $18.8 Trillion In Deficits By 2033

The aging population and growing inflation are making the program costlier

By
Diccon Hyatt
Diccon Hyatt
Full Bio
Diccon Hyatt is an experienced financial and economics reporter who has covered the pandemic-era economy in hundreds of stories over the past two years. He's written hundreds of stories breaking down complex financial topics in plainspoken language, emphasizing the impact that economic currents would have on individuals' finances and the market. He's also worked at The Balance, U.S. 1, Community News Service and the Middletown Transcript.
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Published February 15, 2023
Mature woman (60s) helping elderly mother (90s) pay bills.

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Key Takeaways

  • Social Security costs are expected to rise significantly over the next 10 years because of the aging population and inflation.
  • The program, which keeps 22.5 million out of poverty, will grow to consume 6% of the gross domestic product by 2033 from its current level of 4.8%, helping fuel $18.8 trillion in additional government deficits over that time.
  • Social Security is a flashpoint in the standoff between Republicans and Democrats over the debt ceiling.

As Republicans and Democrats debate the future of Social Security, the cost of the program is growing.

Social Security payments will take up 6% of the U.S. GDP by 2033, up from 4.8% in 2022, the nonpartisan Congressional Budget Office estimated in a report Wednesday. The aging population means that the number of Social Security beneficiaries is growing faster than the number of younger people, the CBO said. 

The figures are one thread of a voluminous report by the CBO released Wednesday that also said the U.S. could default as soon as July unless the debt ceiling is lifted. In total, the CBO raised its projected cost for Social Security by $412 billion by 2032, compared to previous estimates. In addition to demographic factors, the CBO is leaving space for greater cost-of-living increases—including the 8.7% boost to benefits that Social Security recipients got this year—because of higher wages and inflation.

The latest projection highlights the impact the retiree benefit program has on the federal budget at a time when Republicans and Democrats are maneuvering for the perennial standoff over the debt ceiling. Social Security payments are a major reason the CBO projects the government will rack up $18.8 trillion in deficit spending by 2033. Republicans, who took control of the House of Representatives in January, have vowed not to raise the debt ceiling unless the Democrats commit to spending cuts.

Federal debt exceeded its congressionally-set limit in January, and the Treasury Department has been relying on a series of accounting tricks known as “extraordinary measures” to continue paying the government’s bills in the meantime. Those measures will run out some time between July and September, the CBO projected Wednesday. If the debt ceiling is not raised by then, the government could default on its debts, a scenario that experts say would wreak havoc on the economy.

Whether Social Security would be subjected to any of those cuts is a contentious issue. President Joe Biden’s administration has accused the Republican side of wanting to cut the program. Indeed, prominent Republicans have proposed radical overhauls to the program, including Senator Rick Scott of Florida, who called for it to be sunset unless reauthorized by Congress every four years.

Biden, however, seemed to extracted a promise from Republican lawmakers to leave Social Security and Medicare unscathed in debt ceiling negotiations during his State of the Union address. 

“As we all apparently agree, Social Security and Medicare is off the books now, they are not to be touched,” Biden said in his January speech, to a standing ovation from both sides of the aisle. “Alright, we’ve got unanimity.” 

Social Security was created in the Great Depression as a way to prevent senior citizens from falling into poverty, and research shows it continues to do just that. Without it, 22.5 million children and adults would live in poverty, the Center on Budget and Policy Priorities estimated last year.

One government spending watchdog group said giving the program untouchable status is a mistake. 

“We will need to make changes to spending on Social Security, Medicare, and other programs,” the Committee for a Responsible Federal Budget, an anti-deficit think tank, said in a statement. “We need to raise the necessary revenue to fund them. Everything should be on the table to get our unsustainable fiscal problems under control.”

Article Sources
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  1. Congressional Budget Office. "The Budget and Economic Outlook: 2023 to 2033."

  2. Council on Foreign Relations. "What Happens When the U.S. Hits Its Debt Ceiling?"

  3. The White House. "Press Briefing by Press Secretary Karine Jean-Pierre, 2/14/2023."

  4. Twitter. "Kaitlan Collins, 7:56 AM · Feb 9, 2023."

  5. CNBC. "State of the Union brings brief unanimity on Social Security, Medicare. Why experts say there’s still reason to worry."

  6. Center on Budget and Policy Priorities. "Social Security Lifts More People Above the Poverty Line Than Any Other Program."

  7. Committee for a Responsible Federal Budget. "Debt On Track to Exceed Records in Just 5 Years."