Raise Social Security Taxes — and Cut Benefits, Too

There are two processes that we cannot escape: aging and math. This applies not only to human beings but also to large government social-insurance programs.

Last week the Social Security Administration released its annual trustees report, and the news was not good. Starting in the fourth quarter of 2032, one quarter earlier than previously projected, Social Security is set to pay only 78% of benefits. Such a broad cut is unlikely — Social Security is too popular, and the elderly rely on it too much. Even missing a cost-of-living increase is unthinkable. So something else has to happen.

The news is worse than expected because a lower fertility rate, less immigration, and provisions from last year’s budget and tax law are combining to decrease expected tax revenues. More generally, however, these negative shocks shouldn’t be a surprise, since at least two of those factors are deliberate policies.

Continue reading the entire piece here at Bloomberg Opinion (paywall)

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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.