Americans have long known that the trust fund that powers Social Security was living on borrowed time. But this spring, we learned its life span was even shorter than we thought: The program’s trustees are now projecting that, without Congressional action, the combined retirement and disability fund’s reserves will run dry in 2034, one year earlier than previously projected.
Even given Congress’s seeming inability to act on crucial financial matters (see the current debt-ceiling impasse), it is likely that legislators will eventually move to shore up the program, which is beloved by voters. But the looming trust deadline makes the questions of when and how they’ll tackle the problem all the more urgent.
Most policy watchers expect lawmakers to wait until the last minute and suspect we’ll see a fix that trims benefits and bolsters the program’s existing revenue sources with tax increases, sticking closely to the current structure.
But some experts say this would miss a major opportunity. Rather than hew to the current framework, which was put into place when the country had a much younger population, Congress could use this reckoning to reimagine Social Security—a program that serves nearly 70 million Americans and represents about 20% of federal spending.
Written By: Elizabeth O’Brien
Published By: www.barrons.com