I’m Not Afraid Republicans Will Cut Social Security. I’m Afraid They Won’t.

Congressional Democrats’ final argument prior to the mid-term elections was, of all things, that Republicans would cut or even “end” Social Security. In reality, most Republicans have not given Social Security reform the first thought since President Bush’s failed reform effort in 2005, and the GOP’s de facto leader – former President Donald Trump – opposes any benefit cuts. Since the Republicans’ underwhelming electoral performance, Sen. Josh Hawley, in a Washington Post op-ed espousing a populist conservatism, insisted the GOP should forego any “fiddling” with Social Security. The era of small government, it seems, is over.

But this shouldn’t be a source of relief to Americans: there are good reasons to consider gradually reducing future Social Security benefits and significant costs if we do not. The real danger isn’t that Republicans will cut Social Security, it’s that they’ll fail to even consider doing so.

Due to longer lifespans, lower birth rates and, most importantly, Congress’s failure to act over the last four decades, the Social Security trust fund will run dry in 2035. Without increased revenues, beneficiaries face across-the-board cuts of 20% or more. But paying full benefits would require an additional $350 billion per year, on top of the payroll taxes that U.S. workers already pay. There is no easy solution.

But this is no secret. In 1998, President Bill Clinton said that foregoing Social Security reform would be “unfairly burdening their children and, therefore, unfairly burdening their children’s ability to raise their grandchildren. That would be unconscionable….” In that same year, the federally-appointed Social Security Advisory Board issued a report titled “Social Security: Why Action Should Be Taken Soon.” In 2005, President George W. Bush made Social Security reform his major second-term initiative.

But all was for naught. No reforms have been passed. And since the turn of the century Social Security’s long-term funding shortfall rose from under $3 trillion to over $20 trillion. Social Security’s annual benefit costs have risen from about four percent of gross domestic product in 2000 to five percent of GDP today, a 25% increase in what was already the largest federal spending program. By the late 2030s, Social Security costs will approach six percent of GDP.

Much of that cost increase was due simply to floods of Baby Boom retirements. But far from all of it. Since 2000, the average benefit for a new retiree increased by 36% above inflation, coming in at $1,754 per month in 2021. A two-earner couple retiring today who each collected that average benefit would live at 2.6 times the federal poverty threshold before counting even a penny of their own retirement savings. Little of this has much to do with keeping the elderly out of poverty.

If the average benefit in 2000 had increased only with inflation, Social Security would remain solvent in perpetuity even with the rising number of retirees. And average retiree incomes still would be at record high levels because retirement savings and work in retirement have increased so much. It is hard to conclude that meaningful savings cannot be had without threatening Social Security’s core protections.

Perhaps my arguments are correct, perhaps not. But for these arguments not even to be made would ill-serve Americans, who see many tasks for the federal government other than taking money from lower-income younger Americans and giving it to higher-income older Americans. To cede the idea of any reductions in future Social Security benefits – benefits that, in many cases, have not yet even been earned – is misguided in an era where middle and high-income Americans have amassed record retirement savings on their own.