Editor’s Note: This editorial is part of a series that looks at the challenges of tackling the growing federal debt and the specific programs that drive it. Read the first installment on the debt problem and the next installment on Medicare.
Opinion Social Security needs fixing. Fortunately, it doesn’t have to be painful.
By the Editorial Board
March 16, 2023 at 11:45 a.m. EDT
Unsurprisingly — and, to a great extent, justifiably — Social Security, which makes monthly payments averaging $1,538 to 49 million retirees (it supports millions more via programs for surviving spouses, dependents and disabled workers), enjoys near-sacrosanct political status. Democrats and Republicans alike say they want to attack the debt while keeping Social Security “off the table.”
This is further proof that bipartisan consensus and sound policy are two very different things. There is no serious approach to fiscal sustainability that excludes Social Security. It spent $1.2 trillion in fiscal 2022, or about 21 percent of the total — $5.8 trillion — that Washington spent for all purposes. These outlays are rising inexorably as the population ages: The Congressional Budget Office estimates Social Security’s price tag will nearly double between now and 2033, to $2.3 trillion, or 24 percent of federal spending.
Contrary to common misconception, Social Security does, indeed, contribute to federal debt and deficits. On paper, its dedicated revenue stream — mainly a 12.4 percent payroll tax, split between employees and employers — goes into a trust fund. But in financial reality, the government taps that trust fund via regular borrowing. Since 2021, the trust fund has paid out more than it has taken in, and when it’s finally exhausted in 2034, Congress will face a choice between limiting benefits to what it can pay from current Social Security tax receipts — i.e., cutting them 20 percent — or borrowing from other sources to pay them in full. It will almost certainly choose the latter.