Each year, the Trustees for the Social Security program peer out 75 years or more into the future to see how the program will fare. They compare projected income from taxes and interest on the Social Security Trust Fund with expenses—mostly benefit payments. If the program will end up paying out more money than it’s taking in, then we have a problem.
And indeed it looks like there will be just such a shortfall starting sometime in the mid-2030s. If nothing is done, the government will have to cut benefits by around 21% across the board when this happens.
With Republicans firmly in control of Congress and the White House, it’s well within their power not only to fix the long-term short fall in the Social Security Trust Fund, but to do it in a way that’s perfectly in line with conservative principles. But will they?
The chance of any serious change to Social Security in the next few years is low. Why? That’s where the politics come in.
Even with Republican control of Congress and the White House, these politicians can only hope to push through a handful of major new laws. The new administration already has more than a full plate and so fixing the long-term Social Security solvency problem isn’t near the top of anyone’s agenda.
But let’s engage in a little thought exercise anyway: Given their control over Congress and the White House, what if the Republicans pushed through their preferred plan to fix Social Security? How would that work out for the Republican Party?
First, no Democrats will sign on. Why not? Even if they could negotiate some concessions in their favor, they’re playing with a weak hand. The Republicans don’t need Democratic votes, so they won’t concede much. Social Security doesn’t reach a crisis for another 15 or 20 years. Why would any Democrat want to provide cover for the Republicans to be able to claim they fixed this problem in a bipartisan way?
Without both parties involved, we’d get a strictly partisan solution, with far more elements that effectively cut benefits than increase them. The proposed law would change the formula for calculating base benefit amounts so that these benefits would be smaller (especially for higher income earners), increase the full retirement age from 67 to 69, and shift to a lower cost of living adjustment formula. Together these changes would provide enough reduction in benefit costs to bring the program into long-run balance.
What can Republicans claim if they push this law through? “We fixed Social Security by slashing everyone’s benefits.” You can imagine how well that would go over with the 60 million retirees in the U.S., over half of whom depend on their benefits for the majority of their income. And you can bet that the AARP (with its 38 million members) and the Democrats will miss no opportunity to remind those citizens—who tend to vote Republican, and in greater numbers than younger folks—exactly who it was that rammed this bitter partisan pill down their throats.
Not going to happen. Republicans are much smarter than that.
Look, there’s a way to fix Social Security’s long-term problems that combines a little of what the Republicans want and Democrats dislike (benefit cuts) with a roughly equal measure of what the Democrats want and the Republicans dislike (tax increases). And that’s the only way to get to a fix. Why? Because both sides would have to get on board in a bipartisan way, effectively immunizing each other from blame from the general public.
And you know what? The public will get on board too. We understand that everyone will have to give a little in order to protect this well-loved program now and far into the future. Unfortunately, that’s not likely to happen until we get much closer to the crisis point, sometime in the mid-2030s.
Until then, it is far more likely that the government—whichever party is in control—will continue to kick the problem down the road…as they have for years.
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