In 2033, the trust fund that pays Social Security retirement benefits is projected to run dry. What happens next is already written into law: an automatic 24 percent cut to scheduled benefits.
That date comes from the Congressional Budget Office’s latest Long-Term Budget Outlook, a thirty year projection that the Peter G. Peterson Foundation walked through on March 27, 2025. The picture around that 2033 deadline is grim. Debt held by the public closed fiscal 2024 at 98 percent of the nation’s GDP. On current law, the CBO puts it at 156 percent by 2055.
Seventy Six Trillion In Interest
The engine of the deterioration is interest. The average interest rate on federal debt is 3.4 percent this year, against a 30 year average of 3.6 percent and a pre-pandemic norm of just 2.2 percent between 2015 and 2024. Interest costs already consume 3.2 percent of GDP in 2025, close to the post-World War II high set in 1991, and reach 5.4 percent by 2055. At that point interest alone absorbs 28 percent of all federal revenues. Over the full 30 year window, the tab comes to $76 trillion.
Every dollar of it competes with everything else a government does. The CBO warns that rising borrowing costs crowd out private investment, that more interest flows to foreign holders of the debt, and that a government already committed to its interest bill has far less room to fight a war, a recession, or any other emergency. A fiscal crisis becomes easier to trigger, and confidence in the dollar’s reserve currency role harder to keep.
Why The Gap Keeps Widening
Spending does the climbing. Outlays start at 23.7 percent of GDP and keep climbing to 26.6 percent by 2055, driven by health and retirement programs: net Medicare spending grows from 3.1 percent of GDP to 5.2 percent, Social Security from 5.2 percent to 6.1 percent. Revenues drift up alongside them, to 19.3 percent of GDP by 2055 from 17.1 percent this year, and never close the gap. A slice of that increase arrives early, with individual income taxes rising from 8.7 percent of GDP to 10.0 percent by 2027 once the Tax Cuts and Jobs Act provisions expire at the end of December 2025.
And none of it assumes bad luck. The economy simply grows slowly throughout: real GDP expansion stays below 2 percent for the entire horizon, sitting at 1.8 percent in 2026 and sliding to 1.4 percent at the end.
The Peterson Foundation, which advocates for deficit reduction, pressed lawmakers to act on this year’s budget reconciliation and tax deadlines. its chief executive, Michael A. Peterson, put it plainly. “At the very least, they should pledge to do no fiscal harm.” His organization also flagged the projection’s soft spot: under a scenario where the expiring Tax Cuts and Jobs Act provisions are made permanent, debt climbs even higher, which makes today’s numbers an “optimistic” scenario.
The 24 percent cut of 2033, in other words, is the version where Congress does nothing at all.
