What’s Up With Social Security?
The age-old entitlement is once again coming under scrutiny, but it’s unclear whether anyone in Washington has the will to fix it.
This month, Social Security recipients started receiving bigger checks from Uncle Sam, all to help alleviate 40-year-high inflation brought to you by Joe Biden and Co.
According to to Money: “More than 70 million Americans receive monthly checks from the Social Security Administration. … The lion’s share of them — some 52 million — receive retirement benefits, but the agency also assists disabled workers, spouses and children of deceased workers.”
A pay increase is good news for all these groups. After all, it’s an earned benefit, and citizens who pay into the system should receive maximum returns. On the flip side, it’s also our largest entitlement (albeit a transfer of wealth that is quite different from, say, food stamps) and a major driver of our federal deficit.
But our so-called political leaders can’t keep their hands off the Social Security (ahem) lock box.
As our own Nate Jackson wrote back in November: “The glaring irony is that Social Security and Medicare are in trouble if they’re not touched. … Despite the bill of goods sold by DC politicians about all the money you paid into these programs, that money is long gone. Current workers are paying current retirees, and the ratio of workers to retirees isn’t anywhere near as favorable as it was when Swamp dwellers started raiding that ‘lock box.’”
Ideas for changing, replacing, or eliminating the “third rail” of American politics have been tossed around for decades. While some of these ideas are viable alternatives and worth exploring, no one has had the political courage to get serious about Social Security reform. Of course, Democrats are perfectly fine with the status quo, or even expanding the entitlement. On the other hand, Republicans have dropped the ball on numerous occasions when they could’ve undertaken serious reforms.
Avoiding the issue isn’t going to help.
The problem is that conservative policymakers and Republican lawmakers have largely remained silent in recent years on Social Security, leaving it to the Democrats to spin the issue in their favor. Any time Republicans mention reforming Social Security, Democrats scramble to the nearest microphone to demagogue it, to claim that the GOP wants to throw granny off the cliff like they did in that notorious “Paul Ryan” ad from a few years back.
During the 2020 presidential race, neither Donald Trump nor Joe Biden had serious proposals. Trump didn’t want to touch Social Security, while Biden wanted to increase payroll taxes. Neither approach would even begin to resolve the broader issue.
Back in 2001, President George W. Bush’s Commission to Strengthen Social Security considered freezing future increases in Social Security payments. At the time, it was characterized as an assault on seniors, but in hindsight it may not have made much of a difference in received benefits.
“New data from the Congressional Budget Office show that, had Social Security benefits been frozen in 2001, retirees’ average household incomes in 2019 would have been reduced by just 3.9 percent,” writes Andrew G. Biggs, who served on that Bush-era Social Security commission back in 2001, when the proposal to freeze future increases was considered. “Seniors still would have been better off than ever before, while knowing that their Social Security benefits were secure, rather than facing a 20 percent potential cut when Social Security’s trust funds run out in the mid-2030s.”
Biggs adds: “Unless conservatives find their feet on Social Security reform, Americans will face a nearly one-fifth increase in what already is the largest tax most of them pay. Yet these new CBO income data show that when Americans increase their savings and delay retirement, as most have done, ever-increasing Social Security benefits aren’t necessary for seniors to have a secure retirement. Conservative-leaning policymakers need only design Social Security reforms that match this reality.”
So we’re back to the starting point again, and the new Republican majority in the House has another opportunity. But so far, their only idea is to gradually increase the eligibility age for Social Security.
Tinkering with an insolvent entitlement is nothing more than kicking the can down the road, and it’s time for Republican leaders to develop bold plans instead of resuscitating old ideas that never work.
Americans currently paying into the system — and those currently receiving benefits — deserve better.
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