MY VIEW: Marc Goldwein June 2013
The new Social Security Trustees Report leaves us another year closer to the trust fund's insolvency and the takeaway remains the same - we do not have much time to waste.
CRFB's Senior Policy Director Marc Goldwein puts these new projections into perspective in an Op-Ed in today's The Hill. Goldwein writes that while projections may not have worsened, the exhaustion of the Social Security trust fund in 2033 remains a great concern.
The good news from the trustees report is that the program is in no worse shape than last year. But that should be of little comfort to anyone on the program two decades from now, who will face an immediate 23 percent benefit cut regardless of age or income.
Fortunately, this tremendously unfair and indiscriminate cut can be avoided. And if we act today, it can be averted through a number of modest and gradual changes that mostly slow and speed growth and give workers plenty of time to plan.
There is no shortage of policy ideas to fix Social Security, and as far as government programs go, Social Security is a relatively simple one. Most of the goals of reform can be met by adjusting a few levers — the initial benefit formula, the retirement age, the cost-of-living adjustment, the payroll tax rate and the maximum income subject to the payroll tax.
There is no shortage of possible policy solutions, easily demonstrated by The Reformer, our new interactive tool that allows users to fix Social Security. Whether one relies on spending reforms, revenue reforms, or a combination of both, there are many policy options that together could provide Social Security 75-year solvency. Making Social Security sustainable in the long-run is by no means easy, but from a policy perspective, it is not unreachable.
However, time is of the essence. The reforms needed to secure Social Security's future will become much more difficult the longer we wait. As Goldwein argues:
While both sides may prefer to wait until they are in a position to enact a solution on their own terms, the choices necessary to close the shortfall will be much more painful for both sides if we wait. As the baby boomers retire and benefits continue to grow, policymakers will soon lose the ability to phase changes in gradually and allow benefits continue to grow for new beneficiaries in real terms. And not too many years in the future, it will become impossible to exempt current retirees from changes or avoid broad benefit changes that affect even the lowest income beneficiaries.
At the same time, waiting will lead to larger and more broad-based tax increases as fewer generations will be able to share in the burden and benefit change simply won’t be able to phase in fast enough.
In the end, waiting to act will lead to unfair and unnecessarily abrupt changes that would rob today’s workers of the ability to plan and adjust.
Luckily, we have an opportunity to fix Social Security now — the easy way — if both parties are willing to come together and negotiate in good faith. But time is running out.
Click here to read the full article.
"My Views" are works published by members or staff of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.