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Social Security isn't going bankrupt—it's a pay-as-you-go system, self-funded by payroll taxes and legally separate from the general fund. But without Congressional action, benefits face a 22% across-the-board cut in 2032 when the trust fund (currently ~$2.56T in Treasuries) is depleted, per the 2026 OASDI Trustees Report. It doesn't add to the deficit yet, though redeeming Treasuries forces the government to borrow for other expenses. The leading fix is eliminating the payroll tax cap ($184,500 in 2026), which only ~6% of workers exceed—covering 48-67% of the gap. Other proposals: raising the tax rate, adjusting retirement age, COLA changes, and means testing. Tom Hager predicts a move toward privatization.

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This is a topic that will receive a lot more attention in the coming years. Let’s address the elephant in the room: Social Security is not going bankrupt. Social Security is not a Ponzi scheme; it's basically money in and money out, a-pay-as-you-go system. If Congress does not make changes either in the funding mechanisms or benefit structure, benefits will be cut across the board by 22% in 2032. Congress has kicked this can down the road for 40 years.

The government created the perception that Social Security was placed “in” the general fund when it adopted the unified federal budget for fiscal year 1969. That accounting change reported Social Security’s dedicated payroll tax revenue alongside all other federal income in a single bottom-line figure, making the overall deficit look smaller. Social Security’s money was never physically merged with general tax revenue, though – the program’s trust funds remain legally separate accounts backed by their own funding stream and governed by their own investment rules. Congress changed that accounting procedure in 1983 because Social Security is an “off budget” item. In reality, Social Security has nothing to do with regular corporate and individual taxation and the general fund income; it's self-funded and separate.