August 15 2023 | Papers

Coming Soon: Reforming Social Security for the Long Haul

Mark Duggan

Social Security is arguably America’s most important government program, as it is the main source of income for most elderly Americans and represents the primary tax paid by most workers as well. Forty years after Congress made its last significant changes to the program, Social Security again faces severe funding challenges, primarily due to an aging population and slower-than-predicted earnings growth. Absent any change in policy, the OASDI trust fund will be depleted in about ten years and payments to Social Security recipients will immediately decline by an estimated 23 percent. In this document, I propose a package of five reforms, aimed at raising revenue and slowing benefits growth, that would tackle this challenge head-on and put the program on a sustainable fiscal path. These proposals largely insulate America’s most economically vulnerable and instead call for sacrifice primarily from those with high incomes, who have seen large increases in lifetime benefits recently due to rising life expectancy. If implemented, this reform package will ensure that Social Security benefits for elderly and disabled Americans will not be at risk in the future and that the program will not consume an ever-increasing share of federal spending.