Social Security’s trust fund will be depleted by 2032. That means all beneficiaries at that time will experience immediate, automatic 22 percent benefit cuts — unless lawmakers act first. The longer lawmakers wait to enact reforms, the more difficult the options become, and the more likely it is that the government will turn to borrowing to bridge the funding gap. Rather than securing the future of Social Security, borrowing adds to the national debt and worsens the fiscal outlook.

A new report from the Mercatus Center outlines how adding to the debt by borrowing instead of enacting Social Security reform can harm the economy in two key ways:

1. Higher interest rates and borrowing costs. Rising debt drives up Treasury yields and interest rates. That raises borrowing costs, making it more expensive for Americans to take out mortgages, car loans, or small business loans.
2. Rising inflation. Rising debt can also add upward pressure on inflation, eroding purchasing power while raising costs across the economy.

The report underscores the benefits of acting quickly to address Social Security’s shortfalls, concluding:

“From a fiscal and financial perspective, earlier reform can reduce expected future debt issuance, stabilize long-run debt dynamics, provide some certainty to markets, and lower the risk that the Treasury market must digest sharply higher supply during an adverse macroeconomic environment. Social Security reform is therefore not only a retirement policy imperative but also a fiscal and market-stability imperative.”

With many options available to shore up Social Security for generations to come, now is the time for lawmakers to act.