Can Congress cut the budget for Social Security?
No. Medicare and Social Security are MANDATORY expenses! Mandatory spending pays for U.S. federal programs that have already been established by Congress under so-called authorization laws. These laws both establish the federal programs and mandate that Congress must appropriate whatever funds are needed to keep the programs running. In other words, Congress cannot reduce the funding for these programs without changing the authorization law itself. Social Security and Medicare are the major mandatory spending categories.
Clients who are worried that Congress can just decide to cut Social Security or Medicare benefits as part of the budget process – the way they play with defense spending and food stamps – need not worry. Because these programs involve mandatory spending, they cannot be cut without changing the authorization laws underlying them. This would take a 60-vote majority in the Senate.
We’ve been saying for years that Social Security benefits for baby boomers are not jeopardy.
Social Security is completely self-financed. Payroll taxes are deposited into a dedicated trust fund, along with income taxes on benefits and interest on the securities in the trust fund. The trust fund currently holds about $2.8 trillion in excess cash (currently invested in special-issue Treasury securities), an amount that will gradually be drawn down as baby boomers retire. By 2034 assets will be depleted and income will be sufficient to pay about 79% of promised benefits, under the trustees’ intermediate-cost projections.
Social Security does need to be reformed in some way. The trustees have been telling us this for years. If it’s not, the trust fund will be exhausted in 2034 and payroll taxes will cover only about 77% of promised benefits. No one wants an across-the-board benefit cut in 2034. There are great reform measures proposed (and will likely be voted on closer to 2034) view them here. View Social Security’s current solvency here.
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