Sen. Mark Pryor released an ad last week criticizing his opponent, Rep. Tom Cotton, for a number of votes related to Social Security and Medicare, including raising the eligibility age to 70 starting in 2024. The ad says Pryor instead voted to cut waste.
“I’m Mark Pryor. I sponsored this message because cutting waste and fraud is responsible, but cutting benefits isn’t,” he says at the end.
The ad raises a number of issues — including, unintentionally, about what being responsible truly means. For the time being, let’s focus on Social Security. While Medicare’s challenges are complicated and difficult to solve, Social Security is a straightforward numbers game.
Pryor’s message echoes what the polls are telling him. Social Security is the “third rail” of American politics – like a subway’s electrified rail, if you touch it, you die. In the coming years, even many Republicans will have a tough time changing the way the program is structured because so many of their voters benefit from it and like it the way it is.
But Social Security faces a mathematical problem. When it was created, there were 16 workers paying into a system for every retiree. That number is now three to one. Thanks to the retirement of the baby boom generation and our longer lifespans, the system began paying out more than it collected in 2010. That problem will only get worse as more baby boomers retire.
Americans think of Social Security as a national pension plan where they pay into it over time and then withdraw benefits when they retire. Unfortunately, Congress — with the support of American voters, who keep electing these people — has continually raided its trust fund to pay for other programs. There is no money in the bank — just IOUs from the rest of the federal government, which is now $17 trillion in debt.
The good news about Social Security is that, unlike Medicare, it actually can be fixed without fundamental change. The Committee for a Responsible Federal Budget has created a tool, “The Reformer,” at its website, crfb.org, where citizens can pick and choose which policies to enact to ensure Social Security remains solvent for 75 years. Raising the retirement age to 69 and then increasing that age as the average lifespan increases, which is something pretty close to what Cotton voted for, takes care of 39 percent of the problem.
What else can be done? Slowing the rate that benefits grow for the top half of all earners would close another 38 percent of the gap. Changing the way cost-of-living increases are calculated — a method known as “chained CPI” — would narrow the shortfall by another 21 percent.
That’s 98 percent — close enough for government work.
Cutting waste and fraud in the overall program, as Pryor touts in his ad, are not options on The Reformer. While important, that by itself won’t solve the problem. The Reformer does offer ways to cut waste in Social Social disability programs that would close 14 percent of the gap.
If cutting benefits is not acceptable, we’ll have to raise revenues. The easiest way is to subject all of a person’s wages to the payroll tax instead of just the first $117,000, as will be the case in 2014. That would take care care of 77 percent of the problem. However, that means a lot of rich and not-that-rich people will suddenly pay far higher taxes.
What about transferring money from elsewhere in the budget to Social Security? Unfortunately, the government doesn’t exactly have money hiding under the couch cushions. It spent $680 billion more than it collected last year alone despite cuts made in a number of areas, including the military. Interest payments to China and other donors to service the $17 trillion national debt will inevitably rise, which will squeeze out more dollars.
So that’s where we are. A popular government program is unsustainable but fixable. What we’re doing can’t last, but the problem can be solved. So let’s have an honest debate, and then solve it. It’s the responsible thing to do.
Steve Brawner is an independent journalist in Arkansas. His email address is email@example.com. Follow him on Twitter at @stevebrawner.