When Congress was great: Reforming Social Security

Lost amid the impeachment fight and election contests, an epochal moment in the history of America’s welfare state is coming in 2020: For the first time since 1982, the Social Security Trust Fund will begin to shrink. Rather than lending money to the rest of the government, America’s most venerable spending program will begin to call in its nearly $3 trillion of IOUs. This won’t cause any sort of crisis today, or tomorrow. But it points toward a reckoning that is now just a few political cycles away.

This isn’t “news.” Fewer babies born, retiring Baby Boomers, and longer-living old folks have made it inevitable for some time. But this moment is coming sooner than we thought. As recently as 2010, the Social Security Administration predicted that the Old Age and Survivors Insurance Trust Fund would run surpluses until 2026 and run out only in 2040. Now surpluses are expected to be gone in 2020, and depletion is expected in 2034. Because Social Security runs on its own account by law, at that point, if no adjustments are made, benefits would have to immediately shrink by one quarter to align revenues and payments. Given the popularity of Social Security with the American public, such a drastic cut is almost impossible to imagine—but, then again, so is a deal that would fix things….(Read more)