Some of the biggest fiscal problems facing the government aren’t surprises, they’re warnings

Interview transcript

Terry Gerton All right, we seem to get together whenever the Social Security trustees issue their annual report and they just have. We’ve been hearing a lot of the same warnings for years and years. What is actually different in this year’s report?

Brett Loper I wish I could say there was some dramatic new finding or plot twist. The reality is that the numbers are relatively similar to what they were last year and the year before that. So there are some nuances around changes as a result of policy choices made in recent legislation. So there were some small changes as result of tax policies that were enacted as part with the One Big, Beautiful Bill in 2025. But the punchline is really the same. The trust fund that is responsible for the benefits for retired Americans under Social Security is set to, use your term, expire, go bankrupt, become insolvent, run out of funds, whatever you want to, whatever you wanna refer to it. It goes belly up in 2032 and under current law, the way the program is structured, once that occurs, there is an across the board cut of benefits. The trustees projected to be 22% for each beneficiary, which will set in more or less effective immediately. And so you’re looking at roughly $1,500 a month for a typical couple, $18,000 a year reduction in benefits for a typical retired couple. And there’s variability, which we, you know, can certainly get into based on income levels and things like that. But that’s the punchline, you know, the trustees are warning, flashing red. This is going to be a real problem come 2032, unless, unless Congress acts and a president, whether it’s this one or the next one, signs some changes in the law.

Terry Gerton And so, Brett, as you described that, that is the national sort of average impact of what will happen here. Does the impact vary by state?

Brett Loper You know, that’s interesting. We have long worked with an organization called the Committee for Responsible Federal Budget. They, just a week prior to the trustees report being released, did an analysis, they published an analysis — you can find it on their website, crfb.org. I think they were, they referred to it as No State Spared and they actually went in state by state and you know, this is obvious, but states vary as you work your way across the country, demographically. So some have a little bit more of an older population versus the average or versus others. There’s also income disparities as you work your way cross the country. And so you do have differences. And in some states, there may be as few as 15% or 16% of the population that are touched. I think in others, I’d have to go back and go through the report with a finer-toothed comb, but I recall West Virginia and Maine, for example, having maybe 22 to 23 percent of their population touched. Most of the states, I believe, had more than $500 per beneficiary cut. Some of them had a little bit less in the 400s. Again, those variances are a result of different incomes, different demographics, state by state. And of course you could then look at, if you look at those states and you take one that has it over indexes, one of the states with a higher percentage of impacted beneficiaries, the economic results for the state presumably are gonna be greater than in a state where you’ve got say 15 or 16% of the population impacted. So you could have that retiree impact and you can have the economic impact to the state and so anyway, I recommend that report to you know, any of your listeners who would who would be interested in that it was a sort of a new twist if you will on on the looming social security crisis.

Terry Gerton Brett Loper is executive vice president of policy at the Peter G. Peterson Foundation. Brett, as you’re walking through those numbers, I mean, a monthly reduction of between 500 and $1,500 is real money out of people’s pockets. And as we’re living through a time where affordability is the byword, what are the political ramifications of this when you think about why we can’t get Congress to actually take action? What would it take?

Brett Loper So it’s going to take some combination of, I would say, heroic leadership, which is what happened the last time that the program was at risk like it is today. It’s going take some greater public awareness, which I think is growing, and I’ll comment on in just a moment. And it’s gonna take consensus. I hate to use the evil word of compromise, but the reality is neither party is gonna be able to do this just in their own image. They’re gonna have to, you know, both for the sustainability of it and for the, called the political de-risking, they’re gonna to have to come together and stitch together a series of changes that collectively solve the problem, in our opinion. The comment I was gonna make about heroic leadership and what happened the last time was 1983. And at that point in time, there was a commission that had been appointed by President Reagan, led by eventual chair of the Federal Reserve — he wasn’t the chair of Federal Reserve at the time — Alan Greenspan. And he spent, you know, that commission was stood up in 1981 and the ultimate legislation wasn’t enacted until 1983. But there was an understanding between President Reagan and the then-Democrat Speaker of the House, Tip O’Neill. The commission was going to sort of let the commission have space. They were going to see what the commission reported. And then they were gonna, you know, kind of negotiate from that work product. And that’s more or less what they did. Senate was, was controlled by Republicans in 1983. And they were somewhat deferential to the president to give him space to negotiate. And ultimately, the two key leaders were Tip O’Neill and Ronald Reagan. But it was that commission that really was the instigator. And so again, if you kind of point to the necessary ingredients, it’s leadership, leader in Congress, leader with the president. Some consensus forming, a range of ideas. There was several changes that were made. There wasn’t one silver bullet. And that ultimately pulled things together. If you give me just one more minute, I’ll also mention the sort of the public trust, public awareness element of this. We recently commissioned some polling, which has not been publicly released yet, but we intend to do so shortly, but I’ll give you one little nugget from that. We asked the question, or the pollster asked the question, you know, are you aware that this cut is coming, that this Social Security program is at risk? And only 30% of the public had any, any awareness, forget about specific details of the challenge, but any awareness whatsoever. And so they didn’t view need, you know, when you ask them and there’s not much knowledge of it, you know, not a overwhelming number of people say any changes to the program are necessary. But the moment you give them that fact, did you know that this, this crisis is coming in 2032? Their desire for action skyrockets. We have a polling figure, 96% of voters, once they’re aware, want a candidate to produce a plan so that they know that they’re on this and they’re prepared to get to an outcome. So yeah, a long way of pulling together the theme of you’re going to need some leadership, you’re gonna need some public awareness, and you’re most likely going to need a broader base solution.

Terry Gerton Well, 2032 is going to be within the term of most of the Senate, whether they’re being reelected in this cycle or up over the next couple. So everybody in the Senate is going have to deal with this. Who might you see as an emerging heroic leader? And what’s their portfolio of options here?

Brett Loper Important question. So where can some of the leadership emerge? So you have some members who have spent time working on this. So I’ll give you, you know, the best example from the current Senate. Bill Cassidy (R) of Louisiana has been almost a lonely voice in encouraging his colleagues to work on this. He’s recruited some fellow senators like Angus King (I) of Maine, Senator Kaine in Virginia, who also tried to begin to have quiet conversations about some type of way to develop broader-based solution. You’ll see members going whether they’re elected in ’26, we’ve got roughly third of the Senate who’s in cycle. Some of those are obviously open seats, but you’ll have a new class of senators coming in in 2026. As you point out, they’re going to have to solve this before the end of their terms. You know, I think you’ll have some emerge from that group, but you’ll also have some who have experience in this area because they’ve served on the Senate finance committee, which has jurisdiction over the program. And you can probably also look to some who had been, you know, there haven’t been many major bipartisan bills over the course of the last 18 months, but she can go back and look to legislation over the last, whatever, call it, pick the period, 10 years. And, you know, you find the senators who, like, repeatedly show up for these bipartisan deals on whatever the topic might be. And so I think you can look to some of those past actors and presume that they’ll be there again. So kind of a combination of those factors, I would say, produces the senators most likely to be in the thick of the solution.

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