A new Cato Institute policy analysis titled “Congress Can’t Outgrow or Inflate Away the Social Security Financing Problem” is being released today.

Social Security’s finances are unsustainable, and neither high inflation nor stronger economic growth can resolve the program’s financial problems.

In the analysis, Director of Budget and Entitlement Policy Romina Boccia and Research Associate Dominik Lett explain how inflation and economic growth affect Social Security’s fiscal outlook.

Inflation automatically drives benefit increases, as per current law, Social Security benefits are adjusted to account for changes in prices per current law. Even with strong wage growth, payroll tax revenues will not keep pace with the cost of rising benefits, as current law also mandates that new benefits increase in accordance with wage growth.

“To avert a rising tax burden for workers, alleviate fiscally driven inflation pressures, and stabilize the system’s finances, Congress should pursue reforms that reduce future Social Security benefits to reflect demographic and economic realities,” the authors conclude.

You can read the full analysis here. If you would like to speak with Boccia, please contact me to set up an interview.