Can this new initiative get Congress to do something about Social Security?
Two modern-day Don Quixotes, Illinois Sen. Dick Durbin and Louisiana Sen. Bill Cassidy — a Democrat and a Republican — are trying to fix Social Security.
They are prepared to grab the third rail of American politics because the system is in deep trouble and, in roughly 140 days, they will no longer be senators, so they assume no risk to careers that end on Jan. 20, 2027.
Profiles in courage? No.
That said, the last major overhaul of the Social Security system was in 1983, and since that time the Congress’s general attitude toward the system has been don’t just do something, sit there.
The 1983 reforms raised the retirement age from 65 to 67; it raised payroll taxes on employees and employers; it taxed Social Security benefits on certain high-income individuals, though “high” is a misnomer. Taxes kicked in after the first $25,000 in income; and it expanded the number of individuals who paid into the system including certain federal employees and employees at nonprofits.
With the Baby Boom generation in its peak earnings years, a large surplus was accumulated in a trust fund that hit its peak in 2020 at $2.91 trillion. However, understand that all that extra tax revenue was put into the general federal budget in exchange for special Treasury-issued bonds. Now, the government is drawing on those bonds to pay current benefits.
Currently, the trust fund sits at about $2.56 trillion and with Boomers drawing increased benefits, it is projected that the trust fund will run dry in 2032. If nothing is done, benefits are projected to be reduced by about 22%.
Does anyone think Congress is going to allow that to happen?
Second question: Will Congress try to construct a balanced solution that includes some slowing in the growth of benefits, some tax increases and some changes in the way the funds are invested, or will it — at the last second — panic and just borrow more money?
In recent weeks, Congress has begun to stir (a little) and has started to discuss how it might discuss the issue.
Durbin’s and Cassidy’s PROMISE Act would create a formal legislative process to find a solution. The Bipartisan Social Security Commission Act, coming out of the House, would create a 13-member committee.
The work of independent committees has, in the past, been presented with great fanfare and seriousness and then died in the first volley of opposition. Bipartisan groupings function right up until the point at which someone screams that the (Republicans/Democrats — choose one) are trying to kill Social Security or a president withdraws support.
The reality is that much of the work has already been done. Every major think tank has a plan. The Congressional Budget Office has scored various policy options — what would happen if we changed the formula for cost-of-living increases?
Consider, for a moment, that in 2001 the U.S. Government ran a budget surplus of $128 billion. It was projected that the U.S. national debt would be paid off by 2009. What happened? Bush tax cuts, the Great Recession, Boomers retired, assorted wars, the Trump tax cuts, COVID.
Et voilà — a $40 trillion debt.
The Committee for a Responsible Federal Budget, a bipartisan, business-oriented think tank, estimated that the federal debt could be 60% lower if the 2001 tax code had stayed the same. It also found that 77% of spending increases in the last 25 years have been bipartisan.
Members of Congress and presidents of both parties made the decisions that brought us to this point. They can make different decisions.
The president has repeatedly promised to preserve Social Security and balance the budget. Talk is cheap. Don’t just sit there, do something
• Keith Peterson, of Lake Barrington, served 29 years as a press and cultural officer for the United States Information Agency and Department of State. He was chief editorial writer of the Daily Herald 1984-86. His book “American Dreams: The Story of the Cyprus Fulbright Commission” is available from Amazon.com.