A report for Congress said some factors in favor of the system’s finances—such as declining rates of disability claims—"were more than offset by changes disadvantageous to the program.” Image: larry1235/Shutterstock.com
By: FEDweek StaffA report for Congress has highlighted the impact of continued inaction to address Social Security financing needs, citing the increase even in the last year in the shortfall or the steps needed to address it.
The Congressional Research Service, in an analysis of the most recent data from the trustees of Social Security’s trust funds, said “trust fund asset reserves are predicted to decline from their peak value of $2.91 trillion in 2021 to $0 in 2034. Upon the trust funds’ asset reserves depletion, income from tax revenues is projected to cover approximately 81% of scheduled benefits in 2034 and decrease to 72% by 2099.”
“In 2024, the trustees estimated that costs would exceed revenues by 22.2% over the projection period. In 2025, the trustees estimate that costs will exceed revenues by 23.6% over the next 75 years,” it said.
The report said that some factors in favor of the system’s finances—such as declining rates of disability claims—”were more than offset by changes disadvantageous to the program.” Among those were the repeal of the government pension offset and windfall elimination provisions, which had reduced benefits payable to those receiving benefits from CSRS and certain other retirement systems not including Social Security; and new assumptions about birth rates and economic growth. (Back payments for the GPO-WEP repeal have now been completed.)
“In the 2025 report, both the size of the payroll tax increase and the benefit reduction needed to maintain solvency are larger than estimated in 2024. Also, each report shows that larger changes—payroll tax increases or benefit cuts—are needed as the insolvency date approaches,” it said.
For example, the 2024 report had said that an immediate increase in the payroll tax of 3.33 percent would have guaranteed that no reduction in benefits would be needed on the trust fund’s then-projected exhaustion in 2035—but in that year, a 4.02 percentage point increase would be needed.
In contrast, the 2025 report showed that closing the gap with a payroll tax increase would require an immediate rise of 3.65 percentage points but that waiting until the now-projected exhaustion date of 2034 would require a 4.27 percentage point increase at that time.
Increasing the payroll tax is just one of many options for addressing the shortfall, but for any option, the report said, “changes implemented sooner would allow workers and beneficiaries more time to change behavior and adjust expectations.”
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