Politicians’ Social Security plans need to live up to their pledges

For politicians, there is a difference between a pledge and a plan. A pledge — like President Joe Biden and former Donald President Trump promising never to cut Social Security benefits — doesn’t carry any cost. A plan, by contrast, says what that politician is willing to give up in order to keep that pledge. 

Despite Biden’s and Trump’s pledges not to cut Social Security, neither yet has a plan to do it.

President Biden revived Social Security reform as a front-burner issue in his Feb. 7 State of the Union address, where he condemned some congressional Republicans for purportedly wishing to “sunset” the program. Americans, Biden said, have paid into Social Security “with every single paycheck since they started working. Those benefits belong to the American people. They earned them.” 

Since then, Biden has been on a roll. In Madison, Wisc., Biden said, “Look, a lot of Republicans — their dream is to cut Social Security and Medicare. Well, let me just say this. It’s your dream, but I’m going to use my veto pen and make it a nightmare.”

Perhaps sensing a political winner, former President Trump has been reading from the same song sheet. 

“Do not cut the benefits our seniors worked for and paid for their entire lives,” Trump told House Republicans. “Save Social Security. Don’t destroy it!” 

And like President Biden, Trump is using his no-cuts pledge to attack Republicans, in particular Florida Gov. Ron DeSantis, who as a member of the U.S. House of Representatives supported Social Security reforms that reduced future benefits.

And yet, for both Biden and Trump, the plan doesn’t live up to the pledge. Neither can tell Americans how they would fulfill their pledges to keep the Social Security program solvent in the face of 10,000 Baby Boomers every day shifting from being workers paying into the program to retirees claiming benefits from it.

President Biden in his 2020 campaign committed only to imposing the 12.4 percent payroll tax on earnings above $400,000 per year, while under current law Social Security taxes apply only to the first $160,200 in earnings. But less than one percent of the workforce earns more than $400,000 and Biden’s proposal would add only around five years to Social Security’s solvency. To balance Social Security by only taxing earnings over $400,000 would require imposing a 23 percent tax rate, a step that is both politically and economically unrealistic. Even more worrying, the Biden administration’s budget proposal, released on March 9, failed to include even the 2020 campaign’s limited reforms.

Trump, for his part, argued in 2016 that faster economic growth would fix Social Security. It won’t: While faster growth would raise wages and tax revenues, Social Security benefits are adjusted upward when wages increase. Even doubling economic growth would not keep Social Security solvent. More recently, Trump declared in 2020 that Social Security should be funded out of income taxes rather than payroll taxes. What he did not mention is that doing so would require raising income tax revenues by 60 percent, which again is implausible.

And yet there are some elected officials who will tell us how they would fix Social Security. Nine in ten House Democrats co-sponsored the Social Security 2100 Act, which would fix Social Security’s deficits entirely by raising taxes, along with expanding benefits across the board. The Republican Study Committee, for its part, boasts a membership comprising nearly 9 in 10 House Republicans. The Committee’s budget proposal would make Social Security solvent entirely by reducing benefits. In theory, with almost the entirety of the House endorsing some sort of Social Security reform, a bipartisan deal could be struck. But in today’s Congress, compromise is a dirty word. Only presidential leadership can force the two sides to come together.

Social Security is the largest federal spending program. It is the largest tax that most workers pay. It is the largest source of income for most retirees. And it is underfunded by over $20 trillion. After decades of inaction, now it is time for politicians’ plans to live up to their pledges.

Andrew G. Biggs is a senior fellow at the American Enterprise Institute.