Needed — A bipartisan approach to fix social security

Carl P. Leubsdorf, Tribune News Service

Once again, the Social Security system’s managers are warning that the nation’s main retirement fund is running out of money so that, without action, benefits will have to be cut for millions of retirees. We’ve ignored such warnings for many years, and it’s been more than 40 years since something significant was done to bolster Social Security’s viability. Now, the need to do so again is getting uncomfortably close.

The report said that, without action, benefits will have to be cut in 2032. That’s just six years away, within the term of the next president — the one being elected in 2028.

And yet, even those in power who understand the need to do something have done little to lay the basis for what would have to be a bipartisan approach to achieve anything of significance. Certainly not President Donald Trump, whose main contribution to the problem has been to make things worse by gaining congressional approval of his proposal to reduce the amount of Social Security income that is taxed. Interestingly, one of the first proposals for creating a bipartisan panel to craft a plan came from Sen. Rand Paul, R-Ky., a GOP maverick on spending issues.

For the most part, however, those discussing the issue are floating proposals that appeal to their ideological followers, not the broad bipartisan majority that will be needed. House Speaker Mike Johnson, R-La., did so during a recent radio interview, in which he stated the obvious fact that soaring entitlement costs are the main factor in the increasingly intractable federal budget deficit.

“The reason we’re in trouble is because over 74 percent of federal spending is on autopilot—mandatory spending, that is your entitlement programmes like Medicare, Medicaid, and things like Social Security—they have to be adjusted and fixed,” the GOP speaker said. “We have a plan to do that next year, and it’s critical, because we’re at $40 trillion-plus in debt,” he said. Johnson didn’t say how he would “adjust and fix” it. But it’s a safe bet any House GOP plan would call for cutting benefits. After all, that is how the Republican congressional majority opted to deal with the high costs of health care spending in last year’s infamous Big Beautiful Bill.

Of course, Johnson may not be in position to do any adjusting and fixing next year, if Republicans lose the House. Meanwhile, Vermont Sen. Bernie Sanders aimed a proposal at a frequent Democratic target, the nation’s wealthy. He said that removing the income cap on Social Security taxes, which exempts annual income over $184,500 from payroll taxes, would make the system solvent and provide an additional $2,400 per person in benefits. But Jessica Riedl, a former Senate aide now an analyst with the nonpartisan Brookings Institution, and other experts, said the Vermont Independent’s proposal would only cover about half of the projected gap.

And that, she says, is “the rosiest scenario” since it doesn’t account for any lost revenues from the disincentives such an increase might create. Still, raising the income cap is one of the proposals that the nonpartisan Committee on a Responsible Federal Budget says could be included in any bipartisan solution. Here is their list: Raise the earnings cap, as Sanders suggested. While doing so won’t totally solve the problem, it is something that – as Riedl noted –could go about halfway there. And, because it basically means more payroll taxes from wealthier Americans, it would presumably be popular with voters, though not with Republican leaders, who have constantly sought to lower taxes on the rich, not raise them. Increase the payroll tax rate. It’s been 12.4% since 1990 — evenly split between employers and employees — and even a small increase would bring in a lot of revenue. While that would spread the burden broadly, payroll taxes consume a larger portion of income from those on the lower end of the income scale, a regressive aspect likely to provoke substantial Democratic opposition.

Levy payroll taxes on employer-provided health benefits. At present they are not included. Also, tax newly hired state and local workers. Another big revenue raiser but another regressive one. Raise the full retirement age, at which retirees are eligible for their full Social Security benefits, from 67 to 68. Raising the age from 65 to 67 was a major part of the 1983 bipartisan proposal, and another increase seems ultimately inevitable. Reduce annual Cost of Living Adjustments (COLAs). One controversial long-standing proposal would adopt the chained Consumer Price Index, which adjusts the annual inflation increase for the likely adjustment on consumer buying habits and results in a lower COLA rate. Probably not politically feasible.

Any solution would probably require a combination of these ideas and the buy-in from the president and the leaders of both parties. With Trump in the White House, that may be impossible for the rest of his term. One constructive starting point might be for the major party 2028 presidential nominees to agree that whichever one is elected would appoint a new bipartisan panel — and commit to support its recommendations. That’s essentially what happened in 1981 when President Ronald Reagan and congressional leaders chose economist Alan Greenspan to do it. Given today’s bitter partisanship, it might be wishful thinking to expect something like that to happen again. But perhaps — just perhaps — the fact that it is really necessary might make it happen.