Expert warns Social Security could face insolvency within decade

In this edition of "Hot Seat", Scott Mitchell and Ben Tomchik discuss the future of Social Security, including warnings that the program could face insolvency within seven years if no action is taken.

Debt and Deficit Outlook

Ben Tomchik with the Committee for a Responsible Federal Budget said the nation’s debt-to-GDP ratio is now about 100% and projected to rise to 120% within the next decade. The federal deficit, currently at $1.7 trillion annually, could grow to $2.6 trillion in the same period.

“The situation we’re facing right now is bad,” Tomchik said. “Right now, interest is the fastest growing part of the federal budget, and we spend more money on interest than we do on defense.”

Tomchik said interest costs are expected to hit $1 trillion soon, further straining the federal budget.

Spending Today vs. World War II

Tomchik compared the current debt level to the post-World War II peak of 106% of GDP.

“The difference between then and now was in 1945, we were spending for survival,” he said. “Right now, we’re spending for consumption, and there’s no end in sight.”

Federal Budget Process Stalled

Tomchik criticized Congress for failing to pass regular budgets.

“The last time we passed a budget was 2003,” he said. “The first step to getting our fiscal house in order is getting back to budgeting. If you or I were trying to get our own home budgets or our own home financial situations under control, the first thing we would do is pass a budget."

He warned that reliance on continuing resolutions and governing by crisis makes it harder to address long-term challenges.

Nonpartisan Approach

Tomchik said that his organization does not operate from a partisan lens.

“We don’t look at things through a left or a right lens, we look at it quite simply as what is the fiscal impact of the measure going to be," he said.

Social Security Insolvency

Tomchik warned that Social Security could run out of money to fully pay benefits in about seven years.

“When we reach insolvency, by law, there is an across-the-board benefit cut that goes into effect for all recipients,” he said. “And last month, we crunched the numbers and we estimate that benefit cut would be around 24%.”

He added that many leaders promise not to touch the program, but inaction only accelerates the problem.

Medicare and Health Spending

Healthcare costs are another driver of the debt, Tomchik said, adding that bipartisan options exist to address Medicare and Medicaid while improving services.

National Security and Global Standing

Tomchik said America’s rising debt could affect its role in the world.

“People around the world are not looking at us as such a safe haven anymore,” he said.

He added that the money spent on interest could instead go toward investments in housing, technology and other domestic priorities.

Looking Ahead

Tomchik said the national debt recently hit $37 trillion and is expected to grow, threatening the American dream for future generations.

“If we don’t tackle our debt and deficit now, if we don't start going down the right trajectory to correct it, is going to make those dreams and attaining those dreams,” he said.