Republican presidential candidates are talking about changing Social Security benefits for younger workers to stave off a looming insolvency, putting them in line with pre-Trump proposals that also sought to shield current and near-retirees from cuts. Ron DeSantis has suggested people in their “thirties and their forties” could be affected, for example. Mike Pence and Nikki Haley have made similar comments.
But the circumstances have changed since Republicans and some Democrats proposed similar ideas in prior decades, experts say. A long-anticipated glut of Baby Boomer retirements is already here: Keeping their benefits safe while targeting younger Americans could mean Republicans are taking a politically risky position that wouldn’t actually prevent the program from a short-term fiscal crunch.
“Politicians haven’t updated their talking points since the 1990s,” Brian Riedl, a senior fellow at the Manhattan Institute, tweeted. “Back then you could exempt older people from reform because the 74 million boomer retirement deluge wasn’t coming until 2008-2030. Now it’s too late.”
The program has a projected $23 trillion shortfall over the next 75 years, according to the latest trustee report, and will only be able to pay out about 80% of its benefits with tax revenues starting in 2034.
“The insolvency date is like 10 years from now. So any policy that doesn’t take effect for more than 10 years isn’t going to avoid insolvency,” Marc Goldwein, senior vice president and fiscal expert at the Committee for a Responsible Federal Budget, told Semafor. “And that means that if you’re focused on a benefits-only approach, you really need changes that are going to affect new beneficiaries immediately, if not some current beneficiaries.”
Most lawmakers in both parties are reluctant to tackle the Social Security time bomb before its projected insolvency in 2034, showcasing the difficulties of addressing a puzzle that probably requires some trade-offs to solve.
Potential proposals could include raising the cap on payroll taxes along with reducing current or future benefits, but any revenue raiser is historically a difficult subject on the GOP side. And Democrats are only becoming more dug in against changes to benefits the less likely it appears that Republicans will partner on a deal that raises taxes. An attempt by a bipartisan working group of senators to tackle the issue earlier this year seems all but dead.
President Biden voted for the last Social Security overhaul in 1983, which passed with bipartisan support, but left the issue out of his latest White House budget after previously suggesting raising the cap on payroll taxes. He accused some Republicans of trying to use the debt ceiling to force cuts to retirement programs in his last State of the Union, prompting jeers from Republicans, who ended up staying away from Social Security and Medicare in talks. Donald Trump has also attacked his Republican rivals over votes and statements related to raising the retirement age or reducing benefits.
Room for Disagreement
While Baby Boomers have been the face of Social Security’s financial strain for decades, the program also faces challenges from lower birth rates and even wage inequality, which subjects a lower percentage of income to payroll taxes. That could mean the program requires changes even when Gen X and Millennials hit retirement.
“The boomers are sort of the leading edge of a transition from a society that had a lot of workers and few retirees to a society with a lot of retirees and fewer workers,” Andrew Biggs, a fellow at the American Enterprise Institute, told Semafor.