The trustees suggest that, if nothing is done, benefits might have to be cut so that Social Security’s spending is covered by its revenue, which comes mainly from payroll taxes. The prospective cuts to Social Security benefits would initially be around 20 percent and grow to 25 percent. Though this is possible, it seems unlikely. Based on experience, presidents and congresses will simply divert more non-payroll tax revenue to Social Security and Medicare (Medicare is health insurance for the 65-and-older population).
Of course, this will trigger chain reactions, because the money has to come from somewhere, and the choices are no secret: (a) higher taxes; (b) higher borrowing — and bigger budget deficits; (c) cuts in other programs, from scientific research to the FBI to the National Park Service, indeed, most other federal programs. (Note: One other possibility — creating inflation — is left off this list, because it has yet to be tried.) The message here is familiar. The aging of the population, including the high cost of health care, is determining the nation’s budget priorities.
By and large, both parties are practicing the politics of evasion. That is, they have taken Social Security and Medicare spending as a given and have ignored its impact on the rest of the budget. This is true of both Republicans and Democrats. President Trump successfully proposed his $1.5 trillion tax cut (over 10 years), while many of the already-announced candidates for the Democratic presidential nomination have proposed major new programs.
Consider. Sen. Bernie Sanders (I-Vt.) plugs his Medicare-for-all proposal. Sen. Elizabeth Warren (D-Mass.) wants to make tuition at public colleges free. Sen. Kamala D. Harris (D-Calif.) touts a roughly $3 trillion tax cut (over a decade), which she describes as “the most significant middle-class tax cut in generations.” On paper, each of these proposals is financed by some sort of tax increase. But what isn’t acknowledged or emphasized is that the proposals typically ignore the existing budget deficits, which are now approaching $1 trillion annually.
What is to be done about these deficits? The answer, according to most of the candidates, is that nothing is to be done. The large deficits don’t yet seem to have hurt the economy, so cautious candidates conclude they should be left alone. It’s more rewarding politically to peddle grandiose and costly proposals and pretend that the large deficits won’t cause any long-term problems. By and large, this is the path of least resistance.
Ideally, we should be debating the implications of an aging society. At last count, the average life expectancy of someone who reaches 65 is roughly 20 years. In 1950, life expectancy for someone age 65 was only around 15 years. Most government programs were built on the assumption that the elderly were physically and mentally compromised, and although this was (and is) true, the declines begin later.
We could be working longer — and should be. Eligibility ages for Social Security and Medicare should be raised, perhaps as high as 70 and gradually introduced over a 20-year period, to reflect the improved health and the nation’s stretched finances. This prospective transformation is one of the great issues facing the country, but our leaders are evading it because it is not a vote-getter. They should be ashamed.
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