On Social Security, Congress has chosen inaction
A CBS News report highlights the latest warning from Social Security’s trustees, which is the program’s retirement trust fund is now projected to run short in 2032. Benefits would not disappear, but millions of seniors could face a sharp automatic cut of around 22%. The truth has been staring us in the face for a long time and the trustees essentially moved the date up another year, where they cite the impact of tax cuts in the One Big Beautiful Bill.
I remember hearing warnings about Social Security even when I was young. My dad told me not to count on it, which shaped the way I thought about the program. I was a big advocate in college of privatizing portions of the account when that was more formally proposed by the George W. Bush administration but predictably politics got in the way. The failures to address the shortfalls helped me accept that means-testing Social Security benefits might be one reasonable solution, but that approach would also crush the basic compact behind the program: workers pay in with the expectation that they will receive benefits later.
My greater fear is that socialist-minded lawmakers in Washington will eventually look to Americans’ private retirement accounts, including Roth and traditional IRAs, as a source of increasing tax revenue to prop up Social Security or fund other federal priorities.
Americans are living longer, birth rates are lower, and fewer workers are supporting more retirees. But reform is hard. Raising taxes is unpopular. Reducing promised benefits is unpopular. Raising the retirement age is unpopular. Means testing or lifting the wage cap gets high earners angry. So Congress chose inaction as the easiest option while simultaneously making statements about the sacredness of the program. There is quite of bit of irony there.
That is a policy choice, and it is another example of the worst kind of budgeting in Washington. Kick the can in favor of more delays, shifts costs, while hoping a future Congress will deal with the outrage and political fallout.
States cannot fix Social Security, but they understand fiscal reality better than Washington does. Promises have to be paid for. And when elected Congressional leaders refuse to act, they are just choosing to inflict more pain later on, hoping they are not around so they can dodge any accountability.
—Ray Nothstine
— The Federalism Beat