July 7, 2026
I have recently been overwhelmed by the number of articles addressing Social Security, and their sense of urgency. One was titled “Furman on Social Security: Attention Must Be Paid.” There was an editorial titled “Congress must act now to save Social Security.” A financial website wants me to start planning now for changes to Social Security. One feed tells me that the retirement crisis, like the tornado in “Twister,” is already here. Financial advisor, Terry Savage, whose column appears in the Springfield Republican, asks “What does insolvency mean for Social Security?” Letters to the Editor are debating whether or not to privatize Social Security. Seeing that I have a dog in this fight, I thought it would make sense to investigate what all of the hullabaloo is about.
The Social Security Trustees recently released a report on the systems finances. The numbers didn’t change much. Unless something is done, the Old Age Survivors and Disability Insurance (OASDI) program will be unable to pay full benefits starting around 2032. Without reforms that adjust the balance between incoming revenue and outgoing benefits, the system may have to cut benefits by as much as 22%.
Several factors have contributed to the potential shortfall. We have more retirees, and they are living longer. The average life expectancy is up 50% since 1940. On the revenue side, the ratio of workers to beneficiaries has fallen from 5:1 to 2.9:1. The Social Security payroll tax of 12.4% applies to less personal income today (83%) than it did in 1983 (90%), arguably due to income inequality. Trump’s anti-immigration policies are making it worse. According to the Trustees’ report, lower immigration will deepen Social Security’s financial hole because many immigrants are working-age adults who would be paying into the system for decades.
Fixing the shortfall is an easy math problem for Economics undergraduates, but it poses a Ph.D-level political problem according to Jason Furman, Harvard Economics Professor and President Barack Obama’s chief economist. The fund’s projected depletion is just the date by which something must be done politically.
Congress and the White House could easily take action to sustain America’s retirement system, but, given the current state of our politics, there is no guarantee that they will. In the past, Congress has always reached a compromise to continue funding Social Security, and changes have been phased in over time.
The Bipartisan Policy Center recommends adjusting benefits and altering the rate of taxation. The amount we pay in payroll taxes is much less than most other rich countries. However, our deficit is larger relative to our economy than any other rich country, and is larger relative to the economy than at any time in our history with a few exceptions. Congress does have options some of which will admittedly be unpopular. Congress could raise the Social Security tax rate from 12.4%. It could end the $184,500 “cap” on payroll taxes. Congress could reduce benefits proportionately so those with higher incomes (from retirement plans, dividends, interest etc.) would see their benefits reduced. Lastly, Washington could print money.
The radicals in the Republican Party have clearly declared war on entitlements, and made drastic tax cuts in order to cut off the oxygen supply to many of these programs. Who can forget “repeal and replace?” By some estimates, approximately ten to fifteen million people will lose medical coverage under the Affordable Care Act aka Obamacare and Medicaid because of the OBBB aka One Big Beautiful Bill. Approximately four million recipients have lost their SNAP aka food benefits.
Speaker of the House Mike Johnson has vowed to make his Zombie-like Congress take a look at Social Security with an eye to cutting benefits. He says that they need to be “adjusted and fixed.” His goal is to hold Social Security hostage on behalf of Republican goals. He has not mentioned anything about increasing revenue streams through reasonable deliberations and compromise. That has been the Republican strategy all along going back to Paul Ryan and earlier. Starve the beast by cutting taxes, plead poverty because of huge deficits, and then cut benefits.
Privatization is not the answer President George W. Bush tried and failed to do that in his second term. Social Security is a guarantee. Self-directed accounts are no guarantee as we have seen from multiple market meltdowns, and Trump’s meme coin Ponzi scheme. Accounts run by money managers pose the same risks, and present enormous conflicts of interest. Until we can get politics out of the equation, Social Security will continue to be an issue. Until we can get a reasonable compromise, to paraphrase actor Charlton Heston, the government will have to take away Social Security from our “cold, dead hands.”