Spending Savings

Tie Social Security Increases to Progressive Price Indexing

Debt Level 157.1%

With spending of $1.1 trillion in 2021, Social Security is the largest program in the federal budget. In that year, Social Security spending came to 5% of the U.S. economy. Government actuaries project Social Security’s trust fund will be insolvent by 2035. CBO projects Social Security spending will total $17.3 trillion over the next ten years. And, CBO projects the program will grow more rapidly than the economy, rising to 6.4% of GDP by 2052. This plan proposes to gradually slow the spending growth in this program to 5.4% of GDP by 2052, which could be achieved through the following options.

Social Security benefits are currently based on a beneficiary’s lifetime earnings and are indexed for changes in wages in the entire economy, which tend to be higher than the change in prices. Under progressive price indexing, lower income workers would continue to have their benefits calculated based on changes in wages. Higher income individuals, however, would see their benefits calculated based on changes in prices (CPI) and not wages. As a result, higher income beneficiaries would see their benefits increase but at a slower rate than lower income beneficiaries. This reform would achieve a little over $50 billion in savings over ten years.

Reduction in debt in 2052 (including debt service):

-4% of GDP

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