Editorial: Ready or not, Social Security needs to be reformed

Americans are thoroughly accustomed to annual increases in their incomes, thanks to everything from inflation adjustments to performance-based raises given to deserving workers. But in a mere seven years, a very large cohort – retirees who collect Social Security – will face the prospect of life-changing reductions.

The reason? The Social Security Trust Fund is drying up rapidly, forcing benefit cuts in the near future unless Congress takes action to refresh the fund. "The Social Security retirement program is just six years from insolvency, according to the program's trustees," the Committee for a Responsible Federal Budget reported July 16. "At that point, the law requires benefits to be reduced by an estimated 22% to ensure the program's costs do not exceed its revenues after the retirement fund is exhausted in late 2032."

Connecticut, sadly, finds itself at the top of the losers' list. The CRFB predicts the average benefit for retirees who live in the state would drop by $556 per month.

What's to be done? Rep. John B. Larson, D-1st District, who serves on the House Ways and Means Social Security Subcommittee, has been introducing a bill called the Social Security 2100 Act since 2015. The bill would "safeguard Social Security for all Americans," according to Rep. Larson's website.

His major opponent in the Aug. 11 Democratic primary, former Hartford Mayor Luke Bronin, promises to make Social Security reform a priority, just as Rep. Larson has. However, "Congressman Larson has introduced that same bill for about a dozen years, including when he was chair of the Social Security Subcommittee and the Democrats had the White House, the Senate and the House," Mr. Bronin said, "and that bill didn't even get out of his own committee."

It's true that Congress has seen the runaway train of Social Security's impending collapse for several years, but it's also true that Congress has managed to rouse itself to enact reforms several times. The AARP lists major reforms enacted at least 11 times since the benefit was created in 1934.

Back when Rep. Nancy L. Johnson, R-Conn., was acknowledged as Congress' foremost expert on Social Security, it was not uncommon for politicians and senior activists to make apocalyptic statements about the program's future. Somehow, the apocalypse never arrived. Social Security survived.

Yet today's Congress may not possess the competency and bipartisan capabilities of many predecessor chambers. And some of the reforms under consideration likely will send members running away in terror.

One credible proposal, touted by columnist Veronique de Rugy on these pages, is to transform Social Security into an anti-poverty program. "The Congressional Budget Office estimates that giving new beneficiaries a flat benefit at 125% of the poverty level (roughly $1,660 a month) would erase the entire 75-year deficit while raising benefits for the lowest earners," she wrote July 17. The CRFB reported in March, "A very high-income couple can now receive about $100,000 in annual benefits. … (S)uch high benefits far exceed what is needed to maintain an adequate standard of living."

It also might not be too late to revive elements of President George W. Bush's partial-privatization plan, which would have enabled young workers to invest some of their payroll taxes into private-sector investment products. This approach would have pushed the trust fund's insolvency data far into the future while serving as a hedge against senior poverty.

"Workers with very low, low, and middle earnings would have received total Social Security benefits 3% to 8% above those scheduled in current law, while high-earning employees and those earning the maximum taxable wage and above would have received benefits 2% to 4% below scheduled levels," Andrew G. Biggs, senior fellow at the American Enterprise Institute, wrote last year. It will take at least one election, and perhaps as many as two, for politicians to judge whether American retirees are ready for reforms of this nature, but they certainly need to be brought forward.

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