Report Calculates When Social Security Will Run Dry... It’s Not Looking Good
Social Security is the profoundly electric third rail of entitlement reform. The retirement system takes up a third of mandatory budget spending and 23 percent of the budget as a whole, and yet there seems to be no great rush to rein in a behemoth of a program.
Well, let this be another wake-up call, just in case you hit snooze the other 63 times the alarm went off: The annual Social Security and Medicare trustees report estimates that reserves for the program will run dry by 2035.
According to Fox Business, the report, released Monday, also notes that costs of the program will exceed income by next year — the first time since 1982 that will have happened. By 2035, those reserves will be tapped and only 80 percent of benefits will be able to be paid.
Another huge entitlement problem: Medicare’s Hospital Insurance Trust Fund, which pays for hospital services for Medicare recipients, will only be able to cover 89 percent of costs by the time 2026 rolls around, according to The Washington Post.
“Lawmakers should address these financial challenges as soon as possible,” a summary of the report reads. “Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”
The problem is that the public — and public policymakers — have already had time to prepare and they’ve chosen not to. Instead, our ostrich-like polity has its head firmly implanted in the sand. Social Security recipients seem assured that since they’ve paid into the program, it’ll never go away, and politicians have done little to disabuse them of this notion.
In terms of potential reforms to the sprawl that is Social Security, we can confine ourselves to the past three administrations to demonstrate just how impotent our leaders are when it comes to wrestling with the entitlement Kraken.
George W. Bush wanted to partially privatize the retirement system and let individuals have their own personal accounts; after winning re-election in 2004, it became one of his major policy initiatives. Republicans in Congress thought that it would become a major issue that Democrats would campaign upon in 2006; thus, House Republicans decided to table the proposal until after the election. (They still ended up losing both houses.)
In 2012, the Obama administration decided to float a modest reform after the appetite for a more comprehensive overhaul was dead on arrival: It tried to change how cost-of-living increases are calculated. That didn’t work, either. Instead, the president decided to champion what became a signature plan of Bernie Sanders during his 2016 presidential run: Expanding Social Security.
“It’s time we finally made Social Security more generous and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned,” Obama said in a 2016 speech, according to The Washington Post.
“And we can start paying for it by asking the wealthiest Americans to contribute a little bit more. They can afford it. I can afford it.”
As Andrew Biggs wrote in Fortune, this was “once a fringe idea in the Democratic Party, a view held by a small number of activists who had no interest in compromise or conciliation. But when fringe actors take over a political party, a fringe view can become the party line.”
President Trump, meanwhile, has proposed cutting Social Security for his 2020 budget, but only in a desultory fashion; there’s been no comprehensive plan that’s been put forth. He also promised on the 2016 campaign trail that he was the “was the first and only” Republican candidate to “state there will be no cuts to Social Security, Medicare & Medicaid,” so it’s clear it’s never been a major priority for him or his administration.
Yet, hope springs eternal. Here’s a March 17 headline from the financial services company website Motley Fool: “If Trump Is Re-Elected, Expect Social Security Reform to Be a Priority.”
I’m not holding my breath.
The lack of political will to get Social Security under control isn’t a Republican or Democrat problem. Both parties, sadly, are unwilling to touch America’s biggest entitlement program, to apply the most basic cuts or means-testing proposals so as to save the system.
These are Band-Aids, however, for a program that badly needs triage. Forget about debating the merits of individual proposals. If we don’t even have the will to put the Band-Aids on, how are we going to do the major surgery that’s required?
We’d better figure it out fast — in the next 16 years, to be exact.
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