Social Security: Insolvency date keeps getting closer

Time is running out to avert a Social Security cataclysm, said William A. Galston in The Wall Street Journal. The program's trustees warned in a recent report that the Social Security trust fund "will be exhausted in the first quarter of 2033"—nine months earlier than they predicted a year ago—at which point benefits will be cut by 26%.

A few factors explain why the coffers are being drained: The over-65 population has nearly doubled since 2000, beneficiaries are living longer, and declining fertility rates mean there are fewer workers to support each beneficiary. We've known about these trends for decades and could have enacted reforms gradually. Now it's too late. If lawmakers acted today, "restoring Social Security's long-term solvency would require a 22% benefit cut for current and future beneficiaries," or an increase in payroll tax to 16%, from the current 12%. But lawmakers won't act today. President Trump "has repeatedly ruled out cuts to Social Security," and Democrats didn't do anything when they were in power. At some point, politicians will have to "level with the American people about the hard choices that lie ahead."

"If endless borrowing were no cause for concern," the fix would be easy, said Bloomberg in an editorial. Congress could just change the rules that say Social Security can't borrow money to pay out benefits and carry on. But with the national debt sitting at $36 trillion and rising fast, that's not possible. So we have to consider the other available options, said David Von Drehle in The Washington Post. One is to raise more revenue, possibly by making the wealthy pay more. "Another choice is to further raise the age of full eligibility," which has already gone from 65 to nearly 67 for those born in 1960 or later. Or we could "increase the number of workers paying into the system." But President Trump's immigration crackdown means the opposite is happening.

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There's one more idea on the table, said Allison Schrager in Bloomberg. Sens. Bill Cassidy (R-La.) and Tim Kaine (D-Va.) have proposed creating "a separate fund for Social Security" that could invest in "stocks and other investments," not only Treasurys, as the current trust fund is required to do. The senators estimate that savvy investing would be enough to fill the fund's coffers. And maybe they're right: "In hindsight, the program would not be facing a shortfall" if it had jumped into stocks two decades ago. "But investing is always easy in hindsight." There's no guarantee the market will replicate the outsize returns of the past 20 years. And with Social Security so near to insolvency, some tax hikes and benefit cuts are likely inevitable even with a shift to stocks. "The first rule of investing, after all, is that there is no such thing as a free lunch."