Blahous Tells it Like it is with Social Security
Voters say they want a candidate that “tells them like it is,” but as Social Security Trustee Charles Blahous describes, that may mean facing difficult realities about Social Security. In just six years, the Social Security Disability Trust Fund is expected to become exhausted, triggering benefit cuts if no action is taken. Also, the larger Social Security Old Age trust fund is scheduled for insolvency within 15 to 20 years. Without reforms, all beneficiaries would see a cut of 21 percent. Blahous lists nine of these difficult realities:
1. Social Security faces a large and growing financing shortfall.
2. The program's trustees have unanimously called for prompt financing reforms.
3. Literally "not to touch Social Security" would mean allowing it to become insolvent, triggering sudden, deep benefit reductions.
4. Because it's unlikely lawmakers would allow a literal "no action" scenario to suddenly slash benefit payments, the more probable consequence of a protracted "don't touch" policy would be the abandonment of Social Security's financing structure.
5. The reason Social Security faces a shortfall is that scheduled benefits substantially exceed worker contributions.
6. Social Security benefit costs are growing much faster than the economy's ability to keep pace, an unsustainable rate of increase requiring corrections.
7. Under a "don't touch" scenario the program will make mounting demands upon federal taxpayers in upcoming years.
8. Under current law younger generations will face significant net income losses through Social Security, even if they receive all scheduled benefits.
9. Currently workers can claim Social Security benefits three years younger than in FDR's time, despite lifespans having lengthened considerably since then.
The full explanation of each of the nine points is available here.
The Social Security Trustees report urges policymakers to reform the program so it is sustainable in the long-run. It is clear that a “don’t touch” scenario is not a plausible alternative; the longer policymakers wait, the more difficult and disruptive changes will become and the less time future retirees will have to plan. You can use our Social Security Reformer to look at the most commonly discussed options for Social Security and create a plan that would secure the future of the program. Chuck Blahous is a senior research fellow at the Mercatus Center and has been a public Trustee for Social Security and Medicare since 2009.
Read the full paper here.