Senator Rand Paul of Kentucky appeared on Mornings with Maria to discuss the economic ramifications of the ongoing government shutdown, while emphasizing the critical situation concerning the Social Security trust fund. A recent report from the nonpartisan Congressional Budget Office (CBO) highlights that the Old-Age and Survivors Insurance (OASI) trust fund, which is essential for financing Social Security benefits, is projected to face insolvency by 2032. Without legislative action from Congress, this situation could lead to automatic cuts in benefit payments.
According to the CBO’s 10-year budget and economic outlook, spending from the OASI trust fund will escalate significantly—from $1.5 trillion this fiscal year to over $2.5 trillion by 2036. The increasing gap between the trust fund’s expenditures and income is alarming; the CBO estimates that this deficit will balloon from $207 billion in 2023 to $525 billion in 2032 and further to $691 billion by 2036, assuming that full benefits continue to be paid out.
Social Security is primarily funded by payroll tax revenues along with the OASI trust fund. Once the fund is depleted, the federal government would only be able to issue benefit payments according to the payroll taxes it collects, resulting in inevitable cuts unless Congress intervenes. The CBO suggests that beneficiaries may face a 7% reduction in benefits starting in 2032, with cuts averaging around 28% annually from 2033 to 2036.
Moreover, an analysis by the Committee for a Responsible Federal Budget (CRFB), a nonpartisan think tank, indicated that couples retiring in 2032 could experience an annual reduction in benefits of approximately $18,400, based on a projected 24% decrease.
The potential insolvency of the OASI trust fund is compounded by a rising demographic trend: as the population ages, Social Security spending is increasing at an accelerated rate. Historically, Social Security accounted for an average of 4.5% of GDP from 1976 to 2025; however, this figure is anticipated to rise to 5.2% in 2023 and reach 5.9% by 2036. By 2026, Social Security expenditures are expected to exceed $1.6 trillion, climbing beyond $2.7 trillion within the next decade.
Mandatory spending, which includes both Social Security and Medicare, remains a significant driver of federal spending and budget deficits. Over the years, mandatory spending’s share of GDP has elevated from 11.2% (1976-2025) to an expected 14.2% in 2023, with projections suggesting it will rise to 15% by 2036. In 2026, total expenses from mandatory programs are projected to reach $4.5 trillion, which constitutes a large portion of the federal government’s spending, anticipated to surpass $7.4 trillion this year.
In contrast, discretionary spending—funding for federal agencies provided through annual congressional appropriations— is expected to total nearly $1.9 trillion in 2026, potentially increasing to $2.2 trillion within the next decade. Additionally, interest costs related to servicing the national debt are projected to grow from $1 trillion in 2026 to more than $2.1 trillion by 2036, further complicating the fiscal landscape.
As the government shutdown continues, the urgency for Congress to address these looming fiscal challenges, particularly the solvency of Social Security, cannot be overstated.
