A little pain, a big fix
Unsurprisingly—and, to a great extent, justifiably—Social Security, which makes monthly payments averaging $1,538 to 49 million retirees (it supports millions more via programs for surviving spouses, dependents and disabled workers), enjoys near-sacrosanct political status. Democrats and Republicans alike say they want to attack the debt while keeping Social Security “off the table.”
This is further proof that bipartisan consensus and sound policy are two very different things. There is no serious approach to fiscal sustainability that excludes Social Security. It spent $1.2 trillion in fiscal 2022, or about 21 percent of the total—$5.8 trillion—that Washington spent for all purposes. These outlays are rising inexorably as the population ages.
The good news is that there is still sufficient time before the actuarial day of reckoning to take the necessary measures, just as President Ronald Reagan and Speaker Thomas P. “Tip” O’Neill (D-Mass.) did when they pushed through a reform package in 1983. They were acting on warnings of looming insolvency that were first raised in the mid-1970s.
The even better news is that there are plenty of plausible ways to stabilize Social Security. While none would be entirely painless, the costs would be reasonable. Those costs can and should be borne primarily by those with the means to do so, rather than on lower-income people, whose benefits can and should be protected.
The costs of putting Social Security on a sounder footing should also be considered in light of the benefits: freeing resources for other purposes, including some, such as education and research, that enable the economy to grow and create jobs—which, in turn, will generate revenue for Social Security.
Though the Social Security Trust Fund is a bit of a fiction, it is a useful one: The concept of ensuring its ability to pay planned benefits over 75 years helps define policy goals and organize policy options, by limiting them to changes in the program’s own tax and benefit structure as opposed to tapping general revenue needed for other priorities. It also acknowledges political reality, which is that people think of Social Security as an earned benefit for which they paid, via taxes, in their working lives—not “welfare.”
Social Security has served this country well for nearly nine decades. It can continue to do so sustainably, with modest sacrifices from citizens able to bear them. An institution this crucial, this big and this financially challenged cannot, however, be stabilized without any cost to anyone. The longer politicians—and voters—pretend otherwise, the more expensive the ultimate price tag will be.