Smetters Warns Budget Rule Masks 15% Social Security Cuts, Scores Transfers at $0
Updated
Updated · Fox Business · Oct 22
Smetters Warns Budget Rule Masks 15% Social Security Cuts, Scores Transfers at $0
2 articles · Updated · Fox Business · Oct 22
Summary
Social Security could hit insolvency in 2032 or 2033, triggering automatic benefit cuts under current law rather than full payments, Penn Wharton Budget Model director Kent Smetters said.
A federal budget scoring rule would treat replacing the shortfall with general revenue transfers as costing $0, even though Smetters estimates that borrowing would add nearly 200% of GDP over 75 years.
CBO projects the main trust fund will be depleted in 2032, with average benefits cut 28% and about $2.7 trillion in reductions from 2032 to 2036; PWBM instead estimates a 15% cut in 2033.
Smetters said relying on general-fund transfers could unsettle bond markets, lift interest rates and encourage lawmakers to choose an 'easy button' that avoids fixing Social Security's underlying finances.
He argued Congress still has time to choose among tax hikes, benefit cuts or mixed reforms, but warned delay makes a bipartisan deal like the 1980s overhaul less likely.