Social Security made one of its periodic returns to prominence in the midterm elections, as Democrats accused Republicans of plotting to cut (or end) the underfunded federal retirement program. But why is this even an issue? Why has Congress waited four decades to fix Social Security, when common sense says it’s easier to act sooner than later? The answer is that common sense is wrong: Americans nearing retirement have played a game of chicken with Congress for decades, refusing to support the additional taxes needed to keep Social Security solvent while daring their representatives to cut their benefits when Social Security’s trust fund runs out in 2035.
Older Americans will almost certainly win that game, since neither political party has the will to cut Social Security. The reality is that reform of Social Security and other long-term programs are in the hands of both citizens and politicians who benefit precisely from not reforming them.
Since the mid-1980s, Americans have been told that, lacking additional revenues, Social Security will be unable to pay full benefits past the mid-2030s. By 1992, Social Security’s trustees urged that “appropriate options to strengthen the long-range financing of the program should be developed.” Presidents Bill Clinton and George W. Bush both tried to reform Social Security. And yet, nearly 40 years and more than $20 trillion of unfunded benefit obligations later, nothing has been done.
Early action would spread tax increases or benefit cuts over multiple generations, making reform less painful and economically harmful than lumping all the changes on a single group of Americans.