How to Save Social Security

June 3, 2013

According to recently released Social Security Trustees Report, Social Security's trust fund has just 20 years to live, say Jim Kessler, senior vice president for policy, and David Brown, a policy adviser, for the economic program at the think tank Third Way.

Congress is ignoring this reality, thus guaranteeing that the program's reserves will expire, and forcing benefits for the retired and disabled to immediately fall by 23 percent starting in 2033.

  • During Social Security's original implementation, the federal government spent $3 on investments (in education, research and infrastructure) for every $1 on entitlements.
  • In 2023, it will spend $1 on investments for every $5 on entitlements. That means less money for teaching kids, curing diseases and building roads.

The question now is whether the same dysfunctional Congress that cannot seem to muster enough votes to name a post office can touch the third rail of politics and keep Social Security from going down and taking public investments with it.

  • Congress is unable to develop and pass a Social Security solvency plan with the necessary super majority in the Democratic Senate and a majority in the Republican House.
  • But the same two chambers could pass a law that outsources the job to a commission, to develop the plan and leave Congress in the position with only two choices: vote yes on the commission plan to save Social Security or vote no to let its financing dry up.

The last time Social Security was on its deathbed, President Ronald Reagan and congressional leaders appointed a commission, led by Alan Greenspan, to develop a 75-year solvency plan. The plan included a balance of tax increases and benefit reductions, and laid the groundwork for a bill that passed both chambers and was signed by the president.

  • The Greenspan Commission plan promised to make Social Security solvent for 75 years.
  • In the end, the law achieved 50 years of solvency, which by government standards is pretty good work.

A national commission on Social Security is the most practical option to solve this problem, and it should guarantee solvency for at least 75 years. It has worked in past and it can also work in the future.

Source: Jim Kessler and David Brown, "How to Save Social Security," Politico, May 31, 2013.

 

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