The trustees of Social Security recently reported that the retirement system can pay full benefits until 2035, when it will be able to pay about three-fourths of promised benefits. That is not a crisis. It is a manageable problem.
The system needs to be restored to long-term health, but policy makers must realize that broad-based benefit cuts are not really a viable option. For most people, the ability to finance a secure retirement has been ruined by stagnating wages, repeated stock market busts, diminished home equity and weakened or nonexistent pensions. Social Security, whose average monthly retirement benefit is $1,268, is pretty much all that is left. Most people age 65 and older get two-thirds to all of their income from Social Security.
And yet, in the deficit-obsessed, anti-tax world of Washington, closing the shortfall in Social Security has come to mean broadly cutting benefits. That would be a mistake. Targeted cuts — like lower payouts for upper-income recipients who live longer and draw larger benefits — could improve the system’s finances and fairness.
But those who promote across-the-board cuts are not interested in strengthening the system. They want to reduce the budget deficit. And even though Social Security is not a cause of today’s deficits, they would rather cut benefits than improve the system’s finances by imposing tax increases on higher-income taxpayers or phasing in a modest payroll tax increase over decades.