OPINION:
Congress is finally focusing on the looming Social Security crisis.
Without further cuts in benefits or higher payroll taxes, the Social Security Administration projects that the trust fund for old-age pensions will be depleted by 2033.
As conceived by President Franklin D. Roosevelt, the program is self-financing. The trust fund is supported by payroll taxes equally paid by employees and employers, with any surplus invested in Treasury securities.
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For decades, the program has been paying out more in benefits than it receives in payroll taxes from workers and their employers.
For workers born in the 1950s, the discounted present value of benefits received in retirement will exceed the taxes paid while working by 22%. For those born in the 1960s, 1970s, 1980s and 1990s, the comparable figures will be 33%, 38%, 37% and 33%, respectively, according to the Peterson Foundation and Social Security Trustees’ actuarial analyses.
The slight dip in excess benefits for more recent cohorts reflects the 1983 bipartisan reforms that raised payroll taxes and increased the retirement age to 67.
Senators elected in November will have to address this problem during their six-year terms in office. Some in Congress are finally getting serious about the problem.
Reps. Tom Cole, Oklahoma Republican, and Tom Suozzi, New York Democrat, introduced a bill in the 119th Congress, the Bipartisan Social Security Commission Act of 2026, to establish a bipartisan commission to propose a solution and require a simple up-or-down vote in the House and Senate.
That is how we got the 1983 reforms.
Sens. Bernie Moreno, Ohio Republican, and Elizabeth Warren, Massachusetts Democrat, propose eliminating the cap on wages subject to the tax, which is currently $184,500.
They argue that it is unfair for higher-income workers to pay a smaller share of their earnings.
However, the program is already steeply progressive.
Workers in the highest quintile of earners receive benefits roughly equal to what they and their employers paid in, while lower- and middle-income workers receive progressively more.
The Moreno-Warren solution would make Social Security an entitlement program that taxes the rich to subsidize the poor and the middle class.
Entitlements account for 60% of federal spending, and Social Security pensions are about 36% of those mandatory outlays.
What separates Social Security from other entitlements, which dominate the federal deficit debate, is that it is financed by dedicated taxes.
Unless Congress acts, benefits will be cut to 78% of promised levels when the trust fund is depleted.
The federal deficit is about 6% of gross domestic product.
In 2025, the Congressional Budget Office projected the national debt would grow to 156% of GDP by 2055, assuming economic growth of about 2% a year.
During the Bush and Obama presidencies, the pace was 2%. That ballooning debt can be addressed only if entitlement spending is cut or taxes are raised.
The statutory requirement that Social Security be self-financing puts much of that burden on the elderly.
The sentiment these days is that the elderly are fair game because today’s seniors are much better off than prior generations.
Treasury Secretary Scott Bessent says faster growth is the solution. In a sense, he is right — but as the principal architect of the Trump 2.0 economic program, he is an obstacle too.
During the first Trump administration and the Biden administration, the economy grew at about a 2.5% annual rate, but so far, the Trump 2.0 economy has reverted to about 2%.
Artificial intelligence has been boosting investment and accelerating productivity growth these past two years, and the economy should be growing more rapidly, from 2.5% to 3.5% annually.
Yet growth is being taxed by the Iran war’s boosting of gas and diesel prices, tariffs’ disruption of global supply chains and deportations’ shrinking of the immigrant workforce.
The weight of economic studies shows that immigrant workers complement, rather than compete with, native-born American workers by filling skills gaps, starting new businesses and doing jobs that most Americans are not willing to do, such as picking lettuce and working in meatpacking plants.
If a builder cannot find enough immigrant roofers and masons, then American electricians and plumbers have less work.
Reducing the supply of foreign workers — by curtailing new business startups and exacerbating skills shortages in occupations where immigrant workers could fill gaps — depresses economic growth and lowers employment among Americans with less than a college education.
A sensible immigration policy that increased quotas and focused visas on those with needed skills, and a trade policy focused only on the real problem — China — and one that returns us to free trade with our allies, would give the economy a big lift.
That would permanently raise economic growth to at least 2.5%, but that is the exact opposite of Mr. Bessent’s program.
Economic growth permanently elevated to 2.5% would permit Congress to supplement payroll taxes with general budget funds to maintain Social Security pension benefits at promised levels and stabilize the national debt at about 113% of GDP.
Maybe it is time for a new Treasury secretary.
• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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