The Federal Deficit and Social Security

This week, the Congressional Budget Office (CBO) released its estimate of the Fiscal Year 2023 Federal deficit at $1.7 trillion, a sharp increase from Fiscal Year 2022. The Social Security Administration also announced a 3.2 percent cost-of-living increase (COLA) for Social Security recipients for 2024, adding to pressure on Social Security’s finances.

• Both CBO’s estimate of the deficit and the pressure on Social Security show the impact of higher interest rates on overall Federal spending, including on servicing the national debt, which rose 33 percent over FY 2022.
• A decline in Federal receipts also explains the higher deficit estimate.     
• The Social Security Trust Fund is expected to become insolvent in 2033, requiring a 23 percent cut in benefits unless action is taken.