Separating Social Security truth from fantasy

Politicians seem to think they can promise anything, so long as younger generations will be around to foot the bill. Case in point: President Obama became the latest politician to call for upping how much the federal government pays out to retirees. “It’s time we finally made Social Security more generous and increased its benefits,” he announced last month.

Yet the Social Security trustee’s report, released late last month, paints a different picture. The report shows that the federal program is still on schedule to be insolvent by as soon as 2034.

{mosads}With that reality in mind,  rosy proposals that call for expanding Social Security benefits show a shocking disregard for reality—and my generation’s future. Millennials like me will spend a lifetime paying into Social Security, yet the facts show there’s slim to no chance it will be there when we need it.

We’re already aware of what lies ahead. A recent Pew survey showed over half of us do not expect Social Security to be around when we retire, while nearly 40 percent expect our benefits will be reduced. And we’re not deluded in our thinking—data confirm the Social Security program is on the fast track to bankruptcy. Expanding benefits will only hasten its collapse.

Social Security is already the biggest part of the federal budget, costing $911 billion this year. This money comes primarily from payroll taxes, which are taken out of the vast majority of Millennials’ paychecks. But even those payments simply aren’t enough to keep this program financially afloat, and the situation will rapidly worsen as our parents’ generation retires.

The program is projected to run out of money by 2034 and trigger automatic benefits cuts, according to the program trustee’s report. And that’s the rosy picture. The Congressional Budget Office expects the Social Security trust fund may run out as soon as 10 years from now.

Preventing this looming disaster will require careful rethinking of how Social Security operates. Yet President Obama’s proposal to expand it doesn’t count. It will only speed up the program’s bankruptcy, and even if we try to pay for it using tax increases, that will only delay the inevitable while harming the broader economy. The program needs reform—not fantasy and empty promises such as the president is peddling.

So, what to do?

The most basic reform is eliminating waste, fraud, and abuse in the program. Between October 2014 and this past March alone, the Social Security Administration recorded tens of thousands of allegations of fraud. Meanwhile, the Social Security Disability Insurance Fund (SSDI), officially intended to help people whose debilitating conditions prevent them from working, has lax standards that allow many to exploit the program. The Government Accountability Office found $11 billion in wrongful overpayments between 2005 and 2014.

Eliminating this fraud is important, but it’s chump change in the long run. What’s more important is implementing less politically convenient reforms to focus Social Security on those who need it most. A key reform would be introducing elements of means testing, ensuring that benefits are flowing to the truly neediest rather than the wealthy, who have a greater ability to save. Also eliminating some of the outdated special privileges built into the system, such as the exemption for certain government employees.

Simply put, Social Security has to catch up with the times. People are living and working longer than they were when the program was created, and the modern economy has changed the way we prepare for the future. Young people of my generation demand a fresh, flexible approach that puts us—not the government—in charge of shaping our futures.

The opposite approach is President Obama’s proposal to simply increase Social Security benefits without actually reforming this failing program. This may be a politically popular proposal, but that doesn’t translate into sustainable policy. It would only make an unsustainable program even less so.

Millennials need to stop allowing politicians to make pledges using our futures as collateral. We’re each estimated to put $400,000 into Social Security over our working careers, yet even the program’s own analysts predict it will be insolvent in less than 20 years. One thing is certain: It certainly will be if President Obama gets his way.

David Barnes is the policy director of Generation Opportunity.