Procrastination is one of Congress’ finely-tuned skills, as made clear by the unnecessary drama that has erupted when deadlines for the fiscal cliff, government operations and transportation funding have arrived over the past few years. In the end, Congress is usually able to come up with a mediocre solution that works until the next deadline starts looming.
The constant need to take care of the immediate crisis distracts from serious long-term issues that are worthy of attention — namely, Social Security. Although the retirement trust fund exhaustion date is roughly 2034, the longer Congress waits to save the system the more painful those reforms will be for everyone.
The Mercatus Center at George Mason University and the Committee for a Responsible Federal Budget co-hosted an event Tuesday in which several scholars spoke with congressional staff about how to reform Social Security. With the Disability Insurance Trust Fund projected to reach depletion in late 2016, it will be up to the current members of Congress to save the system before recipients see their benefits arbitrarily cut by 19 percent. Reform of the Disability Insurance system may lead to comprehensive reform, including improvements of the retirement trust fund.
“We should be using the fact that SSDI is facing trust fund depletion as an opportunity to do comprehensive Social Security reform,” Marc Goldwein, the senior policy director at the Committee for a Responsible Federal Budget, said Tuesday.
Although the scholars in attendance had disagreements over how best to reform Social Security, one thing was clear: Congress must do something now.
“We are running out of time to deal with this problem,” Charles Blahous, a public trustee for Social Security and a senior research fellow at the Mercatus Center, said. “Each year that goes by that we don’t [repair Social Security’s financial outlook], it gets more and more difficult.” Blahous also said Social Security’s fiscal forecast is so bad that many reforms that are viable options today will be ineffective just a few years from now.
“Somebody who’s retiring today at age 62 will still be 80 or less by the time the trust fund exhausts and they get an across-the-board 25 percent cut,” Goldwein said. “Somebody in their forties or fifties today would just be entering the program.” He explained that waiting on reform means less time to slow the growth of benefit costs and less time to spread the pain widely across generations.
Despite calls to expand Social Security from the likes of presidential candidate Sen. Bernie Sanders, I-Vt., and Sen. Elizabeth Warren, D-Mass., expansion of the program would be an obvious mistake. “Add costs to the system, make the cost go up by having further delays, anything that makes it more difficult to solve is a very irresponsible thing to do,” Blahous said. “Do as much as you can do to improve the financing outlook as soon as you can.”
Economic and demographic developments over the past decade have significantly depleted the Social Security trust funds. The disability insurance fund, projected a decade ago to reach exhaustion in 2027, is now less than two years from exhaustion. The main trust fund for retirees had been projected to reach exhaustion in 2043 but is now projected to reach exhaustion in 2034. Time is clearly running out for reform.
