A week ago we learned that the go-broke date for Social Security had been pushed back by a whole year:
The annual Social Security and Medicare trustees report released Thursday says Social Security’s trust fund will be unable to pay full benefits beginning in 2035, instead of last year’s estimate of 2034. The year before that it estimated an exhaustion date of 2035.
The projected depletion date for Medicare’s trust fund for inpatient hospital care moved back two years to 2028 from last year’s forecast of 2026…
When the Social Security trust fund is depleted the government will be able to pay 80% of scheduled benefits, the report said. Medicare will be able to pay 90% of total scheduled benefits when the fund is depleted.
So the programs won’t vanish but obviously a 20% cut in Social Security would be tough on the people who are living on that. Today Megan McArdle has a piece pointing out that this problem hasn’t exactly snuck up on us.
I have been writing about these trustees reports for more than 15 years. When I started, all these projections sounded comfortably far off — we had decades to fix the problem! Now we have 13 years. And in all that time, we have done nothing at all, except watch the date of insolvency advance.
In 2008, it was 2040, and the people likely to be worst affected — those who would be eligible to retire just as the trust fund was exhausted — were 35. Now, the people facing the most disruption are 54, much closer to retirement than to their college graduation.
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The solutions to this problem are things everyone already knows about too, but they aren’t likely to happen. No one wants to touch the third rail of politics.
Pretty much everyone knows how we’re going to fix Social Security: through some combination of tax increases and benefit cuts…
Senior citizens are America’s most powerful voting bloc. Any party that makes those changes unilaterally will be slaughtered — which means neither Republicans nor Democrats will do it unilaterally, unless they happen to be the unlucky folks who get stuck holding the bag when the money actually runs out…
Furthermore, Democrats now have a much more muscular left wing than they did a decade and a half ago, and that wing wants Medicare-for-all and increased Social Security benefits,, not an austerity agenda. The Republicans, meanwhile, have sprouted an energetic populist faction that is also likely to oppose any attempt to touch benefits — or to raise taxes or allow in immigrants who might temporarily ease some of the fiscal strains on the programs.
I think she’s right on both counts. The squad and their fans will never accept any kind of cuts to these programs when what they really want is single payer health care (Medicare for all) and maybe universal basic income (Social Security for all). On the other side of the aisle, populists don’t seem eager to engage in entitlement reform either. Over in France, we just had an election where President Macron was demonized for trying to liberalize the French economy. Meanwhile his populist right-wing opponent, Marine Le Pen, ran on lowering the French retirement age to 60.
You don’t have to guess at how this would go even if some Republican were to propose reform. The White House was so eager for someone to demonize that it attributed a brief mention in Sen. Rick Scott’s 11-point-plan (which said all Americans should be asked to pay something in federal taxes) to the entire party. They got 3 Pinocchios for that but you get the idea. Democrats are on a hair trigger to attack on this issue.
It’s hard to see how we’re going to get this fixed in the current environment. I guess we’re just going to keep watching the go-broke date get closer until someone has no choice but to deal with it.
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