A new analysis from the Congressional Budget Office has come up with nine states in which cuts would apply for some Social Security beneficiaries as soon as 2026. Alabama, Alaska, Louisiana, Mississippi, Montana, Oklahoma, South Carolina, West Virginia, and Wyoming are singled out as especially at risk because of unique demographic and economic challenges in each. These states R34 1En3 have many of the same troubling trends of workforce decline, wage growth that has slowed, and aging populations that are disproportionately impacting the ability to maintain the benefits at current levels.
Demographic Crisis Deepens
The crux of the problem is mostly a dangerous imbalance between workers paying into Social Security and recipients collecting payments. Alabama’s ratio has risen to almost two beneficiaries for each contributor, and West Virginia’s coal country is coping with the phenomenon of mass outmigration of younger workers. These states are graying faster than the national average, and there are not enough newborns to replace the people who are retiring. The CBO estimates these changes would necessitate 3-5% benefit cuts in the absence of the intervention.
State Supplemental Programs at Risk
The potential reductions more directly affect state supplements, not core federal benefits. Several of the nine have long provided added contributions to accommodate higher medical costs and lower retirement savings for their residents. Louisiana’s Elderly Income Supplement and Alaska’s Longevity Bonus program could be on the chopping block next. In regions like these, where costs are high, these bonus payments can mean the difference between economic disaster for middle-class senior citizens and financial stability for seniors who are particularly vulnerable to economic instability, because they’re frail and housebound.
Political Battle Lines Form
Lawmakers’ reactions reflect the country’s division on the future of Social Security. Senator Katie Britt (R-AL) cast the report as “evidence that we must modernize entitlements,” and Representative Troy Carter (D-LA) referred to it as “a manufactured crisis to justify benefit cuts.” The division arises as Congress is preparing to debate a reform of Social Security this session that begins in July, when the continuing fear of the loss of their majority in the midterm elections adds urgency to the discussion.
Administration Responds
White House officials tried to calm increasingly anxious seniors. “President Biden will not support any policy that would force America’s seniors to choose between a vaccine and eating,” Press Secretary Karine Jean-Pierre said. But there, Democrats have yet to offer specific solutions to address the unique challenges for the state that the report outlines. Treasury Department officials acknowledge that they are reviewing options for temporary federal help for beleaguered state programs.
Grassroots Outcry Grows
The AARP has also marshaled its 38 million members to fight proposed cuts, with call banking drives in the key congressional swing districts. “This isn’t abstract budgeting — these cuts would take food from the tables of some of our most vulnerable seniors,” said AARP CEO Jo Ann Jenkins. Meanwhile, advocacy groups for seniors are coordinating protests at state capitols, with the first rallies scheduled for this weekend in Charleston and Jackson.
Financial Planners Scramble
Retirement advisers in affected states say their phone lines are jammed as panicky seniors look for advice. “A lot of clients set up their whole retirement on that anticipated Social Security,” said Birmingham financial adviser Marcus Thompson. Advisers are hosting emergency workshops on budget cuts, some discouraging people from retiring, and others suggesting reverse mortgages as a buffer.
Broader Implications Emerge
Economists caution that this could be the tip of a national crisis. As more and more states confront the same demographic challenges, the Social Security Administration may eventually be put in the unenviable position of having to make tough choices about benefit structures. The CBO estimates that a dozen more states could face funding shortfalls by 2030, potentially putting millions more beneficiaries on cutting blocks nationwide.
