O’Malley needs to rally US behind Social Security
There’s some good news and bad news in 2024 for former Maryland governor and Baltimore mayor, Martin O’Malley, who last month was confirmed by a 50-11 bipartisan vote in the U.S. Senate to become the new commissioner of the Social Security Administration. The good news is that the commute isn’t bad, since SSA headquarters is just down the road in Woodlawn. The bad news is that the agency is said to be chronically understaffed and underfunded, morale is low, and customer service is woeful. But that’s hardly the worst of it. The big, glaring challenge is insolvency, which is about 10 years out on the horizon as the agency will have burned through the trust funds set aside to meet all of its obligations to retirees, disabled people and others. It’s not bankruptcy — far from it — but it would be disastrous to those who depend on SSA benefits if they find out in 2034 that they might receive less than 80% of what they expected.
O’Malley has the tools to get the agency’s house in better order. SSA hasn’t had a permanent commissioner in two years and, as Baltimoreans know better than anyone, the former mayor is all about the numbers. He can deal with unions. He can set performance standards. He can measure outcomes. Anyone now receiving a monthly Social Security check should expect that he’ll soon have a system in place to reduce wait times on the phone calls of anyone looking for help. And we also bet he’ll be on top of technology. That’s how he rolls. During his Senate confirmation, O’Malley observed that too much of the organization was “siloed”; we expect that, too, will be fixed through some common digital platform soon enough.
The tougher call is meeting SSA’s long-term fiscal needs given that the last time Congress took serious action on this front was 40 years ago, when Ronald Reagan was in the White House. Gradually increasing the retirement age from 65 to
67, taxing high-benefit recipients, incrementally raising the payroll tax and moving federal employees into the program were among the fixes. It’s hard to imagine such a dysfunctional Congress with its polarized politics and “fake news” distrust of information sources rallying behind such a plan today. Higher payroll taxes? Delayed benefits? Taxes? No politician wants to run on that platform and especially not most (if not all) of the House GOP.
So that’s why we would encourage O’Malley to do something that’s not been done by past commissioners (including Carolyn Colvin, the former state human resources secretary who served as acting SSA commissioner from 2013 to 2017): Take the message of Social Security’s financial woes directly to the American people. Americans love Social Security. Polls show they’d like the program to continue, but most recognize there’s a problem. Gallup polls show, for example, that 60% of retirees say Social Security is a major source of support, but only 34% of non-retirees think it will be there for them. They need to understand the shortfall is fixable. And the sooner action is taken, the better.
The best fixes are the ones that have been used before. A recent report from the American Academy of Actuaries spelled them out, and they look a lot like what Congress embraced in the Reagan era: Increase payroll taxes (from 6.2% to as much as 7.75%) with some kind of offset in the federal income tax for lower-income Americans. Apply the payroll tax to higher earners (currently, it’s paid only on the first $160,200 in earnings). Tax investment income, and apply some proceeds to Social Security. Reduce benefits for the wealthy. Raise the retirement age.
Presumably, some of these fixes might dovetail nicely with efforts to fix Medicare and perhaps even reduce the federal deficit. Taxing investment income more like other types of earnings would be a natural choice, given how middle-class Americans often bear a greater tax burden than billionaires, at least as a percentage of income. It won’t be an easy message to get out. These are “inconvenient truths” as a certain Democrat once described climate change science). But O’Malley is capable of making the case as he once did for tax reform in Annapolis. It’s a tough job. The odds are stacked against him. It probably won’t make him popular. But for aspiring windmill tilters, there are a few more worthwhile crusades on the horizon.