Mercatus Center research warns delayed Social Security reform could strain Treasury markets as OASI trust fund nears 2032 depletion

According to CNBC, new research published June 26 by George Mason University’s Mercatus Center warned that delaying Social Security reform could increase fiscal risk and strain Treasury markets as the Old-Age Survivors Insurance (OASI) trust fund is projected to be depleted in the fourth quarter of 2032, three months earlier than last year’s estimate, with 78% of benefits payable at that time. Co-authors Veronique de Rugy and Jason Fichtner wrote that pushing reform closer to depletion could make additional borrowing more likely, while combining Social Security trust funds could extend depletion to the third quarter of 2034, when 83% of scheduled benefits would be payable; the research also estimates Social Security’s annual shortfall may grow from $600 billion in 2033 to around $700 billion by 2036, alongside an estimated $2.7 trillion deficit and $46.5 trillion national debt in 2033. The Committee for a Responsible Federal Budget (CRFB) said using general revenue to fund Social Security would require large new borrowing and cited estimates of $800 trillion of borrowing over the 75-year solvency window in nominal terms, or $180 trillion adjusted for inflation; CRFB also estimated that if general funding were used, a 4% neutral rate on 10-year Treasury bonds could rise to 6.6% and a 30-year fixed mortgage rate could increase from 6.3% to nearly 9%.