How Should We Fix Social Security?

Special Guests: Marc Goldwein, Steve Robinson, Tori Gorman

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This week on Facing the Future, we were joined by friend of the show Marc Goldwein, Senior Vice President and Senior Policy Director at the Committee for a Responsible Federal Budget, to look at some possible ways to fix Social Security.  As discussed a few weeks ago on this program, this year’s report from the Trustees of the Social Security trust funds shows that this key social safety net program will be insolvent by 2035 – possibly even earlier, depending on inflation. Also joining me for the conversation were Concord’s chief economist Steve Robinson – who previously worked for the Social Security Administration – and policy director Tori Gorman, who was heavily involved in bipartisan Social Security reform during her years on Capitol Hill.

Here is Marc Goldwein’s take on the trustees reports:

“A young retiree at age 62 is going to be 75 years old when Social Security is insolvent.  We cannot guarantee full benefits to current beneficiaries,” said Goldwein.  “Life expectancy is 85, which means that Social Security is way out of shape. The only good news in the trustees report is mostly an illusion. We had a one-year delay in the insolvency date, which was 2035 whereas last year it was 2034. But they are assuming that there is going to be a 3.8% cost of living adjustment this year. My best guess is that it’s going to be 8.8% this year. When you add that to the economic disruptions such as the war in Ukraine and the recovery from the pandemic, even if there is no more inflation for the rest of this year it moves the insolvency date maybe even up to 2033.”

And because our economic circumstances and the cash deficit facing Social Security are so much more dire now, Goldwein – who served on the staff of the bipartisan Simpson-Bowles Commission established by President Obama in 2010 which, among other things, proposed fixes to Social Security – says incremental ideas proposed just a few years ago are no longer sufficient.

“As we get closer to the insolvency deadline, it’s a heck of a lot harder than it was even 10 years ago,” said Goldwein. “Back in the Simpson-Bowles Commission, we had what I thought was a pretty balanced package that gradually raised the retirement age, gradually made the benefit formula more progressive, and gradually raised the cap on the amount of income subject to the payroll tax. It was phased in over 40 years. If you were going to try that same kind of plan today, first of all it wouldn’t be enough, you’d have to do a little bit more. But secondly, you’d have to phase it in over 5-10 years. In 2010, if we had eliminated the amount of income subject to the payroll tax cap, or if we had indexed all new benefits to prices – a fully tax solution or a fully benefits solution – either of those would’ve gotten 75-year solvency. Today, neither of them would get 75-year solvency. Not even close.”

Robinson agreed that the failure to act earlier has left policymakers with a dilemma. “There is no incremental policy change, whether it’s the retirement age or wage-indexing that could be phased-in over time applying only to new beneficiaries” that could get the job done, he said. “We’ve lost that opportunity. Anything you do today that is phased-in will not have enough savings to avoid trust fund insolvency.”


Part of the problem is demographics, as the number of retirees receiving benefits has grown sharply relative to the working age population funding Social Security through payroll taxes.  So what is to be done? How do we fix it?


Gorman asserted that, “Any kind of reform package has got to come from both the revenue side and the benefit side. If I were going to write this, the first thing I would do is bring in more revenue, probably by expanding the amount of money that is subject to the Social Security payroll tax moving us back to 90 percent of covered wages. And then, on the benefit side, I think you’ve got to raise the retirement age.”

There are some competing approaches that were on display at a recent Senate Budget Committee hearing led by committee chair Senator Bernie Sanders of Vermont.  Sanders and others have introduced a bill to apply Social Security payroll taxes on all income – including capital gains and dividends – for individuals who earn more than $250,000 annually. Sanders says this would expand benefits for all Social Security beneficiaries and avoid steps such as raising the age of eligibility for retirees. Goldwein says though he disagrees with the approach, he gives Sanders credit.

“What I like about this bill is that it gets 75 years solvency, and that’s important,” said Goldwein. “My biggest concern is that a lot of the revenue is sort of a shell game. I don’t think Senator Sanders is doing this on purpose, but when you tax investment income, particularly capital gains as this does, you cause people to sell less capital gains. When people sell less stocks and other assets, you actually lose a lot of revenue on the income tax side.  And so while this bill would make Social Security fully solvent through higher payroll taxes, it would actually significantly reduce the amount of revenue collection we’re doing through the rest of the government. And this would not help our debt problem.”

Goldwein says a more realistic, balanced approach to fixing Social Security would include a collection of options that tackle both the fiscal problem – benefits exceeding cash income – and the economic problem as more people retire from  the workforcenot enough workers to replace them due to the U.S.’s  declining birthrate and restrictive immigration policies.

One idea Goldwein proposed in 2019  in collaboration with The Concord Coalition even includes adding an automatic, voluntary paycheck deduction equivalent to adding another 2-3% on top of the payroll tax to create a tax-deferred individual retirement savings investment portfolio that would supplement Social Security.

Hear more on Facing the Future. I host the program each week on WKXL in Concord N.H., and it is also available via podcast. Join my guests and me as we discuss issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.

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