No one seems to care. Not no one exactly, but very few. I am not talking about the prospect of North Korea soon having improved nuclear weapons capable of hitting the United States or the increasing acceptance of ideologies detrimental to our continuing as a democratic republic, or climate change, or any number of other political or international trends. I am talking about the pending economic collapse of the United States.
The thing that is going to be a great leap forward in this catastrophe is right around the corner and that is the approaching insolvency of the Social Security Trust fund. It will be empty in six years. When it is empty, there will be an automatic cut in benefits of 22%. Do I think there will really be a cut of 22%? No. Congress will not allow that. Congress will fund the SS deficit out of general revenues. The problem is that we are already constantly running deficits. We already spend more than we take in each year. So, to fund the SS deficit, the US will increase the budget deficit. We will borrow more money, adding to the national debt.
The problem with doing that is that we have about reached the point where we have no more borrowing capacity unless we increase the amount of interest we pay to borrow. Already, interest on the debt is the second-largest component of the federal budget, outpacing all other spending categories except Social Security. Payment of interest on the debt is mandatory. It is not something we can decide to cut. We have very little wiggle room.
While a country is not exactly like a household, as a country, we are much like the household that has borrowed so much money that its greatest monthly expenditure is interest- car payment interest, house payment interest, credit card interest. We are like the household that has trouble buying groceries or keeping the lights on because so much of our current income goes to paying debt and the only way we keep afloat is to borrow more this month to pay last month's bills and we are using the credit card to buy groceries and pay the electric bill.
In fiscal year 2024, the U.S. paid $1.13 trillion in gross interest on the debt. This amount is more than the combined budgets for national defense, Medicare, veterans, education, transportation, and science.
The U.S. is still a strong economic power. The reasons we have been able to maintain a strong military and expand the welfare state without paying for it is because other countries want our debt. We are the tallest midget in the room. We are the world's reserve currency. That is not ordained and could change. There are troubling signs that it is changing. Now, when the US refinances debt, we are more and more refinancing long-term debt with short-term debt. That is a troubling sign.
The only alternative to borrowing is to monetize the debt, which means borrowing from the Federal Reserve or euphemistically printing more money. This is not a good alternative and can lead to out-of-control inflation.
While I think Trump's economic policies are bad, especially his tariff policy and some of the things in the so-called Great Big Beautiful Bill, this problem cannot be blamed on him. Both parties have led us to this point, and we have known of this coming SS insolvency for decades. This is not something that just snuck up on us.
I know the immediate response I will get to this is that Congress should pay back the money that it stole from Social Security. That is BS. It didn't happen. Another response is that we need to cut the waste and abuse, and immigrants who are getting Social Security. Again, the waste and abuse are minuscule, and if anything, immigrants make the problem less bad, not worse. People look for scapegoats, but the truth is, we wanted a generous welfare system and did not want to pay for it. Well, the day of reckoning is near, and the Social Security trust fund going bust is going to be a great leap forward on our road to economic ruin. Some things could be done now to avoid this coming catastrophe, but I don't see any appetite for doing them. We are rolling downhill, like a snowball headed for hell.
See the below from the Committee for a Responsible Federal Budget:
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Trustees Warn Social Security and Medicare Are Approaching Insolvency
Committee for a Responsible Federal Budget, June 9, 2026- The Trustees for Social Security and Medicare just released their annual reports, showing a significant deterioration in the financial states of both trust funds. They project that the Old-Age and Survivors Insurance (OASI) trust fund – which funds retirement benefits – will be insolvent in 2032, and the theoretically-combined Social Security Old-Age, Survivors, and Disability Insurance trust fund will run out in 2034. Medicare Hospital Insurance (HI), meanwhile, is estimated to face insolvency in 2033.
Insolvency of these programs would result in steep across-the-board cuts. When the Social Security retirement fund runs out of reserves, beneficiaries will face an abrupt 22% cut; Medicare insolvency would lead to an 11% cut in payments, undermining access to care. Our No State Spared report estimates the state-by-state impact of a similarly-sized cut if it occurred today.
Over 75 years, the Trustees project both programs face shortfalls significantly larger than last year’s projection. The Trustees project the Social Security programs face a combined 4.42% of taxable payroll shortfall – up 16% from last year; they project the Medicare HI shortfall is 33% larger than last year, at 0.56% of payroll.
You can find our preliminary analysis of both reports here. Register for our virtual event, “Checking in on the Social Security and Medicare Trust Funds” featuring a conversation with Social Security’s Chief Actuary Karen Glenn on Wednesday, June 10 at 2:00pm ET here. Full analysis of these reports are forthcoming.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
Washington is sleepwalking into a retirement crisis, allowing our nation’s most important trust funds to go insolvent at the expense of over 70 million beneficiaries who count on these programs.
In just six years – during the next Senate class’s term – Social Security’s retirement fund will run out of money. Medicare will run out just half a year later. Today’s youngest retirees will be turning 68 when Social Security runs dry and 69 when Medicare does. Yet our leaders have no plan to prevent the abrupt 22% benefit cut or 11% payment cut that would ensue.
Politicians have known about and neglected these programs for 40 years now. But the problem is much worse now. Thanks to decades of inaction, solutions like eliminating the taxable maximum or progressive price indexing benefits are no longer close to enough to restore solvency. And thanks mainly to the tax cuts in the “One Big Beautiful Bill” and worsening demographics, Social Security’s projected shortfall is a full 16% worse than last year’s. Medicare’s shortfall is 33% worse.
Instead of talking about solutions to these real funding problems, leaders in Washington instead demagogue each other over the issue, with both sides promising not to touch the programs. Unfortunately, that promise is a tacit endorsement of the across-the-board cuts that will happen at exhaustion – an unacceptable outcome. No state would be spared from the consequences of failure to save these programs from insolvency – each and every member of the House and Senate has constituents that rely on the programs.
There’s no shortage of options out there to avoid this – we’ve put forward several novel ideas in recent months for starters. But enacting solutions requires political will.
It’s time for our leaders to start telling the truth on Social Security and Medicare, and working on real plans to save these programs. Time is running out.
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