As a result of our nation’s demographics, Social Security is on an unsustainable path under current policy and needs to undergo reform. Fortunately, there are many bipartisan options available to consider, as the Congressional Budget Office (CBO) recently reminded lawmakers.
The Concord Coalition has long urged elected officials to make repairs on a program that is of vital importance to millions of American workers and retirees. The list of options discussed in a recent CBO blog post are a good place to start considering what could be done.
In recent years, CBO has highlighted troubling trends in the Social Security program, providing some indication of what is to come if current policies are left unchanged. The budget office says the costs of Social Security benefits are still projected to rise faster than both economic growth and federal revenue in the next few decades. This means we can expect a worsening of the cash deficits that the program is already experiencing.
According to CBO, longer life spans will result in current and future Social Security beneficiaries, in average, receiving benefit payments for longer periods of time than past generations. Thus the average retiree would receive a larger lifetime benefit.
Last year the Social Security Trustees reported that the program’s trust funds were projected to be depleted by 2034. If this were allowed to occur, retirees would face immediate benefit cuts of about 20 percent.
Because Congress has failed to make measured adjustments in years past, our nation is now faced with tougher decisions on necessary reforms. Further delay will mean the reforms will be even more painful. The CBO and Social Security Trustees have both encouraged lawmakers to make changes soon. This would allow new policies to be phased in, giving workers and beneficiaries enough time to adjust.
There are many different options to move Social Security toward sustainability. A 2015 CBO report referenced in the new CBO blog looked at five areas for potential changes in the program: taxation of earnings, the benefit formula, full retirement age, cost-of-living adjustments and benefits for specific groups such as deceased workers’ spouses. These contain a total of 36 specific policy options.
However, the new CBO blog notes that “by itself, no individual option that CBO examined would create long-term stability for the Social Security program.”
So if Congress is serious about making Social Security sustainable, it will have to enact a package of reforms. Lawmakers should reach across party lines to do so. The CBO’s list shows that there is substantial room for discussion and compromise.