The Washington PostDemocracy Dies in Darkness

Opinion Yes, Social Security needs some fixing — but it’s not broken

Social Security checks at a federal facility in Philadelphia in 2005. (Bradley C Bower/AP)

SOCIAL SECURITY mostly accomplishes the purposes for which it was established and which make it politically popular: guaranteeing income security for the elderly and for disabled workers. The poverty rate for elderly Americans in 2017 was 9.2 percent, compared with 11.2 percent of people ages 18 to 64 and 17.5 percent of children. Consumers’ confidence in the adequacy of future retirement income is at a 20-year high, according to a respected University of Michigan survey. Yes, Social Security spending is a major factor in the United States’ structural budget problem, and its trust fund will be exhausted by 2034. A fix is needed. But Social Security is not broken — and does not require a radical overhaul.

Yet hundreds of congressional Democrats have recently announced their support for a pretty sweeping reform. As its title implies, the Social Security 2100 Act would guarantee the trust fund’s solvency for the next 75 years. And it would do so while making the program considerably more generous to all participants, present and future: It would provide an across-the-board increase in basic benefits, including a guaranteed minimum 25 percent above the poverty line, an enhanced cost-of-living allowance and a reduction in the taxation of benefits by raising the income threshold at which the levy applies. It’s paid for by a gradual increase in payroll taxes from the current level of 12.4 percent (split between workers and employers) to 14.8 percent, and by immediately applying Social Security taxes to wage income above $400,000 per year (while leaving wages untaxed between that level and the current maximum of $132,900).

Laudably, the plan tackles two important goals: long-term solvency and the lingering problem of old-age poverty. Less laudably, it does so while diverting scarce resources toward a vast majority of Social Security recipients who are not only not poor but, in many cases, perfectly comfortable. We are all for making the overall tax system more progressive than it already is, including by taxing high earners, as the Social Security 2100 Act would do. You can tap “the rich” only so many times, however; and the priority should be to use that money for children, who are almost twice as likely to be poor as senior citizens.

As it happens, there is an alternative proposal to make Social Security both protective of the elderly poor and more solvent over the long term. The plan would retain Social Security’s current benefit formula for the 30 percent of workers with the lowest lifetime earnings, while reducing the growth rate of initial benefits for the top 70 percent. Phased in over the next 30 years, it would save a relatively modest $77 billion in the first decade. Savings would accumulate more quickly thereafter, though, to reduce Social Security’s total claim on national output in 2048 from 6.3 percent under current law to 5.7 percent, according to the Congressional Budget Office. The CBO refers to the proposal as “progressive price indexing.” Given that it allocates the nation’s limited retirement-income resources to those who need them most, instead of promising more benefits to practically everyone, the “progressive” label does indeed apply.

Read more:

Robert J. Samuelson: Don’t expand Social Security. Our elderly are mostly fine.

Helaine Olen: How to expand Social Security and hurt Howard Schultz’s wallet at the same time

Helaine Olen: Many Americans think they’ll never receive Social Security benefits. That’s wrong.

Megan McArdle: Saving Social Security and Medicare now seems hopeless

Helaine Olen: Bernie Sanders would like to talk about Social Security