Social Security, the bedrock of our nation’s retirement system, is projected to become insolvent in just six years, with benefit cuts of 22% if Congress doesn’t act.
Social Security is barreling toward insolvency due to the fundamental imbalance between its incoming revenues and outgoing benefits. As our population ages and benefits cost more, the program’s payroll tax revenue isn’t keeping up, and as a result, the trust fund’s reserves are quickly dwindling.
Insolvency would be catastrophic for retirees. If a similar cut were imposed today, we estimate benefits would be cut by $500 per retiree per month, more than what the average retired household spends on groceries each month. For a nation grappling with a cost-of-living crisis, insolvency would be devastating.
Lawmakers have thus far failed to do anything about this, despite receiving extraordinarily advanced warning. For 40 years, Congress has alternated between nothing — implicitly endorsing the across-the-board cuts — and making things worse. (Social Security’s Chief Actuary revealed that recent legislation has actually accelerated insolvency.)
Now, for the first time in more than a generation, there is reason for optimism. With Americans concerned about looming benefit cuts, Congress’s gears have started to turn very slowly.
Reps. Tom Cole (R-OK) and Tom Suozzi (D-NY) introduced the Bipartisan Social Security Commission Act, modeled on the 1983 Greenspan Commission, requiring nine of 13 members to agree on a plan that Congress votes up or down. And eight Senators from both parties — led by Sens. Dick Durbin (D-IL) and Bill Cassidy (R-LA) — introduced the PROMISE Act, which would have the Social Security Advisory Board gather public input and write solvency legislation for Congress to vote on.
Both bills draw on an important precedent for Social Security reform: a bipartisan commission to develop solutions, facilitate conversations across the political aisle, and reach a compromise to secure the program for generations.
While lawmakers know the menu of options available, none have been willing to stick their necks out on their own to save the program, for fear of attack from the other side. These bills would address this by creating the environment needed for both parties to reach a yes. It’s an approach that is time-tested — every major reform bill since Social Security’s creation has come about through a commission or similar body that proposes changes, and that Congress debates, amends, and eventually passes.
Why haven’t these bills passed already? Part of the answer is special interests.
In July, AARP opposed both bills. It wants solvency addressed only within the lobbyist-haunted halls of Congress, which it asserts will allow for more open debate. Yet when asked in an open Senate Finance Committee hearing, AARP’s witness couldn’t specify anything that the organization supports.
Both in public and behind closed doors, AARP has long opposed bipartisan rescue plans for Social Security. It failed to provide constructive suggestions to the Greenspan Commission’s bipartisan work in 1983 and was considered by those on the left a “nuisance.”
AARP DOESN’T REPRESENT SENIORS. IT OVERCHARGES THEM
AARP also fears that commissions could fail, which is ironic given their hand in obstructing them. Perhaps their real concern is that a Social Security commission could succeed, as prior ones have since 1935. It is harder to fundraise if seniors are confident that their benefits are secure until the 22nd century.
Congress now has credible, bipartisan vehicles to restore solvency, which is more opportunity than they have had since the 1980s. Will lawmakers let perpetual naysayers cause 70 million Americans to suffer a completely avoidable benefit cut in six years?
Maya MacGuineas is President of the Committee for a Responsible Federal Budget.