Mandatory Spending
Function 650 - Social Security
Reduce Social Security Benefits for New Beneficiaries by 15 Percent
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
| Billions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2015-2019 | 2015-2024 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change in Outlays | 0 | * | -2 | -4 | -9 | -16 | -25 | -36 | -49 | -62 | -15 | -204 |
Notes: This option would take effect in January 2016. Estimates are relative to CBO’s August 2014 baseline projections.
* = between -$500 million and zero.
The Social Security benefits that people receive in the year they are first entitled to benefits—at age 62 for retired workers and five months after the onset of disability for disabled workers—depend on a formula set in law. This option would adjust the benefit formula to reduce Social Security benefits for people who become eligible in calendar year 2016 or later. Benefits would be permanently reduced by 3 percent for people newly eligible in 2016, 6 percent for people newly eligible in 2017, and so on, up to 15 percent for people newly eligible in 2020 or later. Only future beneficiaries would be affected, so the option would not affect payments to people who turned 62 or became entitled to disability benefits before January 2016.