Washington, D.C.– The need for Congress to act to address Social Security insolvency has only become more urgent, say two former public trustees for Social Security and Medicare, Charles Blahous and Robert Reischauer.
Another year has passed without legislation to address Social Security’s financial shortfall, making any eventual solution more painful for participants, they say in a new letter highlighting the need for long-term solutions released ahead of a House Ways and Means Committee hearing on the subject.
This year’s Social Security trustees’ report made clear that waiting to address the program’s financing challenge would be a costly mistake. Every year lawmakers delay, it becomes increasingly unlikely that any eventual solution to the problem would be able to spread the costs of program changes reasonably fairly. The urgency to act is now. If instead lawmakers were to wait until 2034 nears, when Social Security retirement beneficiaries would face a benefit cut of almost a quarter, it would be almost impossible to avoid disruptions in benefit payments without abandoning Social Security’s historical financing structure.
“It is encouraging that lawmakers are at least taking the time to debate the need for a long-term solution, but serious, bipartisan action will be needed to put Social Security on a sustainable path,” said Blahous. “Congress needs to find a balanced, bipartisan approach in which the necessary revenue increases and moderation of benefit growth are spread fairly across generations.”
Younger generations are most severely impacted by lawmakers’ delay. Whether the trust fund shortfalls are addressed through benefit reductions or tax increases, younger Americans will bear the brunt of the burden, either through lower benefits or smaller paychecks. The longer the delay, the greater the harm. As context, if lawmakers acted today, it would require a 17 percent reduction in current as well as future Social Security benefits or a 2.70 percentage point increase in payroll taxes (to a total payroll tax rate of 15.10 percent) to bring long-term solvency to the trust funds. If action were delayed to 2035, when Social Security’s hypothetical combined trust funds would run short, benefits would have to be reduced by 23 percent or payroll taxes increased by 3.65 percentage points (to a total payroll tax rate of 16.05 percent).
Another small but important step forward would be for lawmakers to confirm new public trustees for Social Security and Medicare. These positions provide bipartisan, public oversight over Social Security’s finances, and have been vacant since 2015.
“For far too long the public has lacked the bipartisan oversight of public trustees for Social Security and Medicare,” Reischauer said. “Public confidence in the trustees’ analyses of the Social Security trust funds is of utmost importance as lawmakers ultimately take steps to address the program’s impending financial crisis.”