MarketWatch has published another run-of-the-mill article on the Social Security crisis.
I have read these for over 40 years. They all have the same message.
(1) If something isn’t done, and very soon, the program will go bankrupt.
(2) Congress must act now to solve the problem.
(3) There is still time to fix it.
Ever since 1983, Congress has done nothing to fix it. But the articles keep coming.
The author of the article recently testified before the Senate Finance Committee.
My testimony focused on the Social Security’s incentives — specifically, how the current structure provides disincentives to work and save — and discussed how Social Security reform, if done correctly, can increase U.S. savings, labor force participation, economic growth, and federal revenues. As I testified:
“Social Security faces real and increasingly urgent financial challenges. Reform isn’t only the wise thing to do, it is critical to ensure that Social Security remains solvent and fiscally sustainable and can continue to provide retirement security for generations to come. Social Security reform must not only address the program’s fiscal solvency issues but also remove the disincentives to working later in life. This means reforms must focus on reining in the growth of program costs, encouraging personal saving and investment, and rewarding those in middle and early retirement age who make the decision to extend their working careers. Finally, Social Security reform must begin immediately…We can reform this critical program, and we can do it in a way that will improve the financial security of all future Americans in retirement.”
I can say with confidence: (1) Nothing will be done by Congress. (2) The author will never write an article that says, “Well, I told them so in 2014. Now the problem cannot be solved. The program is doomed. It cannot be reformed. Forget about it.” They never do.
There is a never-ending supply of these people. They like to appear as prophets of doom. They are in fact prophets of inaction. Congress knows that these predictions have never come true. The members know they can do nothing to reform the program, and still get re-elected. So, they do nothing. It’s just good politics.
No “you must act now” expert ever says, “It’s now too late.” So, Congress ignores them.
What would it take to fix it? Prof. Lawence Kotlikoff told a House subcommittee this week.
‘To pay its scheduled benefits in full through time, the Social Security system needs a 32 percent immediate and permanent increase in the future path of payroll tax revenues. Alternately, to prevent having to raise its FICA payroll tax rate, the system needs to immediately and permanently cut all benefits payments by 22 percent.”
This is not politically possible.
The system cannot be fixed.