‘Nothing’ Doing About Social Security?

Despite long being called the “third rail” of American politics, Social Security—or more precisely its viability—has reemerged as an issue in the 2024 presidential campaign.

It came up most recently in a mini-GOP debate between former U.N. ambassador/South Carolina governor Nikki Haley and Florida governor Ron DeSantis. Haley reaffirmed her previous statements that changes would be required to shore up the financial viability of that system (and, arguably more critically, Medicare)—taking pains to emphasize that she wasn’t calling for changes that would impact current/close-to-retiring individuals. 

For his part DeSantis—to whom the question was initially posed—maintained that there was no need to raise the age for full retirement benefits (apparently due to COVID’s impact on life expectancy), as though that were the only potential remedy required[i] (he did express confidence that something would be worked out long-term). And both former President Trump and President Biden have locked in on a “no changes” stance—criticizing any notion of reform as doing a disservice to seniors.[ii]

What’s weird to me[iii] is that those who seem to blithely embrace the “no changes needed” mantra aren’t getting the follow-up question; “but if we don’t change anything, won’t benefits have to be cut?”

Look, I’m now on the collection side of that equation—having contributed to that system what the law said I (and my employer(s)) had to in order to receive a certain benefit decades in the future. The notion that I would have done that for more than four decades only to then have my “promised” benefits reduced does NOT appeal to me in the slightest. Particularly since, going back to the 1980s, my withholding taxes were increased, my full retirement age extended, and my ultimate benefits are now means-tested (a.k.a. “reduced”)—ostensibly to avert a current and future such crisis.

But if the math that we’re presented with is accurate, there’s no way we can maintain the “status quo” on benefits without some change(s)—presumably to those who, like I was in 1983, are several decades away from collecting benefits. In fact, the Social Security Board of Trustees has projected that the looming 2037 “shortfall” means that changes equivalent to an immediate reduction in benefits of about 13%, or an immediate increase in the combined payroll tax rate from 12.4% to 14.4%—or some combination of these changes—would be “sufficient to allow full payment of the scheduled benefits for the next 75 years.”  

Without a doubt, Social Security is most certainly the biggest retirement assumption—by individuals, retirement planners and legislators alike. At a time when we’re working to broaden coverage, to expand the impact of automatic plan design features, and the reach of state-run IRA programs, we know that as valuable, even essential, as those steps might be in broadening and deepening the success of the private retirement system—they won’t be “enough” if we don’t shore up the baseline foundation upon which the nation’s retirement security is currently predicated. Those who oppose “reform” without acknowledging the need for change may find that a popular point of view—but it’s really just whistling past the proverbial graveyard.    

That said, and whatever the presidential aspirants espouse, it will be up to Congress to remedy the situation. That’s not a recipe for hope, mind you—but it is a reality check. 

While Social Security reform may not be at the top of your list of candidate considerations, I’d argue it should be on that list—for those you support, those you love—and you.

- Nevin E. Adams, JD

 

[i] Outside the debate hall he has previously supported making those benefits tax free—essentially eliminating the “means-testing” provisions currently in place that tax benefits above certain income levels.

[ii] Vivek Ramaswamy (while still a candidate) basically says no cuts for seniors—and even hints at a reduction in current levels of “means” testing—but ultimately positions that as a boon for the economy, which will help put Social Security on a firmer financial setting, and then at least partially privatize Social Security.  

[iii] What’s also weird to me is that it’s hard to find anybody who seems to think the problem won’t get fixed at some point—though the definitions of “fixed” vary—and nobody is willing to hazard a guess on who’s going to step up, much less when or how.

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