It’s budget season in Washington, which means the politicians are delivering their annual warnings about the looming Social Security crisis. How big of a crisis — and how close it looms — is largely within their control, and there are basically three proposals to address it: One from House Republicans, one from President Joe Biden and one from former President Donald Trump.
Trump’s plan is so bad that Republicans decided to attribute it to Biden instead. The budget proposal from the House’s Republican Study Committee, released last week, points out that if no changes are made, the Social Security trust fund will be exhausted by 2032. “Ignoring this fact, as the Biden Administration and Congressional Democrats have, will lead to the largest across-the-board cuts to current Social Security retirement beneficiaries in history,” its report reads.
This is a valid point. But “do nothing and let massive automatic benefit cuts occur” is Trump’s position on Social Security, not Biden’s. The Biden administration released a Social Security plan earlier this month that would restore solvency to the trust fund by raising taxes on people who earn more than $400,000 a year.
As for House Republicans? Their plan calls for raising the retirement age “to account for increases in life expectancy.” They realize this is risky — the Biden administration has already pounced on it — which may explain their attempt to sow confusion by pretending their nominee’s plan is actually the other guy’s.
Nonetheless, the plan from the Republican Study Committee, which represents almost 80 percent of the party’s House membership, is worth taking seriously. And in the universe of possible benefit cuts, the GOP preference for a higher retirement age is one of the worst possible options. It’s essentially a benefit cut that targets people with below-average life expectancy. Social Security needs painful changes, but it’s a strangely regressive choice to make them at such a cost to a group that’s poorer than average.
Progress on life expectancy has been very uneven across U.S. society. Educated Americans are living much longer than we used to, but those without bachelor’s degrees are not. Contemporary Republicans like to cast themselves as champions of the working class, but they haven’t updated their policy playbook on major issues accordingly.
Then there is the already regressive nature of Social Security: The richer you are, the larger your monthly benefit check. Liberals generally admire Social Security for being a “universal” program rather than a means-tested one, providing a guarantee of dignified retirement to all Americans without a lot of elaborate administrative rigmarole.
In reality, Social Security is redistributive — those who pay higher taxes receive higher benefits, but not in proportion to what they pay. The point of the Democrats’ tax-raising plan is to make the program more redistributive.
All this said, the idea of raising the retirement age is not completely without merit. In fact, research shows that retirement itself is something of a mixed blessing. On average, retiring seems to lead to worse physical and mental health due to a reduction in activity and social connectedness.
Beyond the narrow budgetary questions of retirement programs, there is clearly a large economic benefit to having able-bodied people work rather than not even if they are in their 60s or 70s. Rather than cut benefits for those who want to retire, America might consider cutting taxes on people who choose to continue working past retirement age.
The U.S. should consider creating an active labor market program oriented toward connecting 60- and 70-something people with part-time job opportunities.
It may be boring to say that Republicans want to cut benefits and Democrats want to raise taxes, and that the best solution is some kind of bipartisan compromise that does a mix of the two. But realistically, the optimal policy probably involves tax increases smaller than Biden proposes paired with spending cuts more careful than Republicans suggest. At least both parties agree — one explicitly, one implicitly — that there is no place in this debate for Trump’s reckless indifference.
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