Former U.S. Treasury Secretary Jack Lew speaks during a discussion on “Reforming the Eurozone: Perspectives from within and outside Europe” during the 2018 Spring Meetings of the International Monetary Fund and World Bank Group at IMF Headquarters in Washington, DC, on April 19, 2018.
Saul Loeb | AFP | Getty Images
Former Treasury Secretary Jack Lew said in an interview Thursday on CNBC’s “The Exchange” that Social Security will not have enough revenue to pay out benefits in full during the next presidential term.
While Congress may not be eager to address the program’s issues now, “it’s unlikely to be many years away,” says Lu, a professor at Columbia University’s School of International and Public Affairs.
“I would caution anyone running for president next time or for the Senate to not leave their options open,” Lu said.
Social Security provides monthly benefits to more than 75 million Americans, including retirees and people with disabilities and their families, according to the agency’s July data.
But the program faces an immediate funding shortfall, which could prompt benefit cuts. In its annual report released in June, the Social Security Administration’s Board of Governors estimated that the trust fund the program relies on to pay retirement benefits could be depleted in the fourth quarter of 2032, when 78% of benefits are paid. Combined with the Disability Trust Fund, the program will be able to provide full benefits until the third quarter of 2034, at which point the trustees project that 83% of scheduled benefits will be paid.
To be sure, payroll taxes on the program will continue to accrue, so the program will not completely lose its ability to pay benefits.
As record numbers of Americans reach retirement age, demand for Social Security benefits is increasing.
Spending for Social Security, Medicare and Medicaid payments rose 7%, or $198 billion, in the first 11 months of fiscal year 2026, according to the Bipartisan Policy Center. Average Social Security benefits and the number of beneficiaries increased, but Medicare enrollment increased, fee-for-service payment rates increased, and Medicaid costs per enrollee increased.
Spending in the first 11 months of fiscal year 2026 increased by 4%, or $235 billion, compared to the same period in fiscal year 2025, according to the Bipartisan Policy Center. As of the end of August, the cumulative deficit for fiscal year 2026 was $2 trillion, according to a Washington, D.C., think tank.
During an appearance on CNBC, Lu said lawmakers should start thinking and talking about Social Security reform.
“There are solutions, but they become increasingly difficult as the day of depletion approaches,” Lu said. “It’s never too early to start thinking about it and talking about it.”
Lu said lawmakers could take a cue from the bipartisan approach taken in 1983, when President Ronald Reagan signed the plan’s last major reforms. These changes included increasing taxes on benefits and the retirement age.
Some lawmakers have proposed investing in stocks to make up for the Social Security shortfall, but Lu said, “I don’t really like the U.S. government owning private companies.” He said there is no guarantee that investments in the market will perform well over any particular period of time.
But lawmakers may consider the size of the wage base and whether incoming taxes will be enough to pay the bill, Lu said. In 2026, up to $184,500 in wages will be subject to Social Security payroll taxes.
“There’s going to have to be some process. We’re going to have to be open to ideas,” Lu said.
