February 4, 2023 - Douglas Myser


Biden McCarthy fight over Social Security. With the Debt Ceiling debate underway, and Secretary of the Treasury Yellen using extraordinary measures to keep paying the bills, that stops in June, its crucial that President Biden and House Speaker McCarthy can come to agreement on a budget bill, to pay the governments bills. That will probably entail some cuts to the budget, although Biden has said that Social Security and Medicare are off limits. Biden had previously asked that those earning over $400,000 pay a bit more in taxes, which the House Speaker opposes. Somewhere they both are going to have to give a little, to avoid a devastating debt default, that economists say would cause the loss of 7 million jobs and a definite recession. Biden McCarthy fight over Social Security.

Social Security's dire finances are due to demographics. The low U.S. birth rates, and slow immigration over the last two decades, along with income inequality, have caused the Trust Fund to dwindle over time. Based on the latest projections, the assets in reserve are expected to run out in 2034. This Trust Fund is used to pay benefits to 49 million retired Americans as well as 6 million survivors of deceased workers. If this excess cash were to be exhausted with the next 12 years, the Trustees calculated that an across the board decrease of benefits of 23% would have to happen, to keep Social Security afloat. What scares politicians, is the fact that older people generally vote by greater percentages than younger voters, and it is viewed as earned money, money they paid into the system. So any politician who cuts it, does so with political peril.


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