Saving Social Security, Saving America

The Problem
In 1935, President Franklin D. Roosevelt started the Social Security program. It was meant to help the elderly with a supplemental income. Today, it helps those who are not able to save enough for retirement. The program undoubtedly helps many Americans, but it has also become an albatross for our national debt. Since 1993, the United States government pays more for Social Security than anything else, including all of our military’s costs. In 2012, the U.S. government spent 21.8% of all of its money on Social Security. But, it’s about to get much worse. In 2013, Social Security cost $800 billion, but, by 2023, the cost will increase to $1.4 trillion. Medicare is the next most expensive item – but that’s for another post. Social Security is funded by the payroll tax, but there is also a trust fund, which, according to the federal government, will be empty by 2033.

The Solution
Conservatives would like to reduce the level of benefits, especially for wealthy recipients, while also raising the minimum age of eligibility. [In 2005, President George W. Bush tried to privatize Social Security, but that attempt went nowhere.] The Democratic solution depends on raising income taxes on the wealthy, thereby having more money available for overall government spending. Given the continuing economic struggles of the middle-class, Democrats, such as Massachusetts Senator Elizabeth Warren, have even proposed expanding Social Security. That does not take into account how Social Security threatens to make our $18 trillion national debt much worse over the next few decades. Unless the problem of Social Security’s finances is understood, emotional appeals about the middle class will ruin Social Security. In 2033, benefits will automatically be cut 23% for all Social Security recipients.

Obstacles to the Solution
In 2011, President Obama and House Speaker Boehner were close to a compromise known as the Grand Bargain. The deal contained some modest solutions to Social Security’s finances. But, the deal fell apart when House Republicans refused to accept any tax increases in exchange for spending cuts. If the Democrats sometimes fail to see the fiscal crisis our government is in, Republicans are beholden to the Club for Growth which spends heavily on television advertising against Republicans in primaries who accept any tax increase, even if part of a larger compromise. When the payroll tax cut holiday occurred a few years ago, Democrats and Republicans agreed that it was good for the economy. So then, might the solution be redirecting Social Security benefits towards those most in need, while perhaps also raising the age requirements? But, if President Obama requires some tax increases, should the Republican-led Congress accept them in order to get something done on Social Security? If anybody cares about the national debt, it is equally important to remember that Social Security is the number one driver of the deficit and there is not much time left to fix the program.