The first major public policy issue I worked on in the White House, almost 30 years ago, was President Bill Clinton’s call to “save Social Security first.” Though the fund wasn’t projected to run dry for another three decades, the country seemed gripped by the issue. A few years later, George W. Bush felt strongly enough about the looming crisis that he spent much of his political capital pushing a strategy to resolve it.
This week the Social Security trustees announced that the trust fund for retirees and survivors will be exhausted in just six years. That’s six years before tens of millions of Americans could see their benefits cut by 22 percent. The crisis is closer than anyone in the Clinton or Bush years ever imagined we might let it get. People who receive Social Security haven’t taken to the streets in outrage — perhaps because they know from experience they will be spared. It’s everyone else who will be made to pay.
Instead of fixing the problem, America is likely to just kick it down the road again, drawing on other parts of the federal budget to pay for the shortfall in this one. The rest of the budget, however, is already strained and getting more so by the day. Putting additional pressure on it will mean less money for children’s education, cancer research, the infrastructure we need to power economic growth — and many other things we need.
Both Mr. Clinton and Mr. Bush warned that the closer the Social Security fund got to insolvency, the worse the options would be for real and lasting change — and the greater the constraints, both politically and economically. An aide to House Speaker Tip O’Neill once called Social Security reform the third rail of American politics: Touch it and you get electrocuted. That was because at the time he said it, roughly 20 percent of the voting age population was receiving Social Security benefits, too big a population for politicians to risk alienating. In six years, that chunk will be about 30 percent.
Sure enough, now that we’re getting close to the cliff, instead of pumping the breaks, politicians from both parties are actually pressing harder on the gas pedal. Bipartisan legislation passed in 2024 expanded benefits for some state employees without paying for them. President Trump’s One Big Beautiful Bill, which included a de facto benefit increase that came at the expense of revenues partially earmarked for Social Security, was responsible for one-quarter of the worsening of the predictions for Social Security over the past year. It’s all aggravating the problem we should be trying to solve. And now there’s talk of passing a law to make it easier to draw money from other parts of the budget — and therefore harder to address the underlying issue.
Senators Bill Cassidy and Tim Kaine have found a way to make that bad idea even worse: Instead of just borrowing funds to pay for the shortfall in Social Security’s budget, they would have the government invest them in the stock market and hope for sustained high returns. If only it were that easy, we could all have our own infinite money machine.
So what could solve this very serious problem? Closing the gap by cutting benefits alone would require immediate cuts averaging about 20 percent. Congress is not going to wield that knife. Closing the gap by raising revenue alone is equally unlikely: Applying the Social Security tax to all incomes — rather than just to earnings up to $184,500, as it’s currently configured — would push the effective top tax rate above 50 percent. That doesn’t leave a lot of room for further tax increases on the rich to close the budget deficit or funding other priorities.
There is still time to do this right. The first step is looking at whom the system is failing. We spend roughly $1.5 trillion a year on Social Security and still leave millions of seniors in poverty, despite the fact that, by my calculations, about 3 percent of the program’s budget, properly applied, could lift all older adults out of poverty. Any plan that protects benefits across the board while leaving the poorest seniors where they are has its priorities backward.
The rest of the options are well known: Index the retirement age so that as people live longer they have to wait longer for full benefits; further tweak the benefits formula to reduce payments to higher-income beneficiaries; or expand taxes by either raising the payroll tax rate or broadening the base to cover all forms of compensation, at all levels.
My own preferred approach would prioritize bringing in new revenue. Under the budget rules, however, Social Security reforms require 60 votes, which means that members of both parties would have to agree on any reform. Hopefully they find something to agree on that does not come at the expense of our children and their economic future.
Jason Furman, a contributing Opinion writer, was the chairman of the White House Council of Economic Advisers from 2013 to 2017.
The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: [email protected].
Follow the New York Times Opinion section on Facebook, Instagram, TikTok, Bluesky, WhatsApp and Threads.
The post The Cliff Is Now Clearly in View. Why Are We Stepping on the Gas? appeared first on New York Times.
