The US government’s social security and medicare trust funds are on track to become insolvent in 2033, but the One Big Beautiful Bill Act (OBBBA) could accelerate this timeline by a year, pushing insolvency to 2032. This is due to the bill’s indirect impact on the programs, mainly through reducing revenue collected from social security benefits.
Under current law, social security benefits are taxable for seniors with high incomes, generating $100 billion in revenue for both trust funds. However, OBBBA would extend and expand tax cuts, increasing the standard deduction for senior couples by over $13,000. This reduction in taxation could cut total benefit taxation by roughly $30 billion per year.
As a result, experts estimate that social security beneficiaries would face a 24% benefit cut, even deeper than planned under current law. Medicare payments would be reduced by 11%. To avoid exacerbating the problem, policymakers should focus on trust fund solutions rather than passing legislation that advances insolvency.
Source: https://www.crfb.org/blogs/obbba-would-accelerate-social-security-medicare-insolvency