Entitlements: Can Social Security be saved?
Social Security will be insolvent in only 16 years, said Eric Boehm in Reason.com. That’s the finding of a new report by the program’s trustees, which says Social Security’s costs will exceed its income in 2020. To cover benefits, the program will have to start dipping into its $3 trillion trust fund. “If nothing changes,” those reserves will be exhausted by 2035 and recipients will receive only about three-quarters of their expected benefits. “That may sound like a long way off, but 51-year-old workers today will just be hitting retirement age when the cuts kick in.” Americans have long known this shortfall is coming, said Noah Rothman in CommentaryMagazine.com, “and they do not care.” In 2005, President George W. Bush unveiled a major effort to reform Social Security. It failed. In 2012, GOP presidential nominee Mitt Romney and his running mate Paul Ryan outlined ways to trim the program’s costs. “They were defeated.” Then in 2016, Donald Trump “explicitly ran against conservative efforts to rein in entitlement spending.” He won. Americans have voted themselves into an entitlement crisis.
Congress could restore the program to health by letting the government invest some “of the Social Security trust fund in the stock market,” said Brett Arends in Barron’s. Federal law says the fund can invest only in low-yielding securities backed by the U.S. Treasury. That’s why Social Security has earned a “dismal” return of 17 percent on its investments over the past five years. U.S. stocks over the same period: 49 percent. “Stock returns are more volatile from year to year, to be sure.” But Canada, Australia, and New Zealand invest their national pension funds in stocks and other assets, “and the results have been amazing.”
Such radical free-market solutions aren’t needed, said Michael Hiltzik in the Los Angeles Times. There are low-risk ways to shore up the program. Right now, the payroll tax that largely funds Social Security only covers wage income up to $132,900. Two Democratic bills in Congress would remove that cap over time and increase “the payroll tax on the wealthy, who get away with paying an unwarranted low tax rate.” But hiking taxes won’t address the key reason Social Security has a cash-flow problem: our rapidly graying society, said Robert Samuelson in The Washington Post. An American who reaches age 65 can now expect to live for about another 20 years, up from 15 in 1950. That means retirees are claiming more from Social Security than the program’s creators ever intended. But seniors today are far healthier than in previous generations. “We could be working longer—and should be.” Politicians could stabilize Social Security by gradually lifting its eligibility age to 70. But our leaders won’t even propose this change “because it is not a vote getter. They should be ashamed.” ■