Opinion>Opinions - Finance

The views expressed by contributors are their own and not the view of The Hill

Social Security’s shortfall: A meteor of our own making

Comments:

by Martin O’Malley, opinion contributor - 04/24/26 1:30 PM ET

Comments:

Link copied

by Martin O’Malley, opinion contributor - 04/24/26 1:30 PM ET

Comments:

Link copied

FILE – A Social Security card is displayed on Oct. 12, 2021, in Tigard, Ore. The go-broke dates for Medicare and Social Security’s trust funds have moved up as rising health care costs and new legislation affecting Social Security benefits have contributed to closer projected depletion dates. That’s according to an annual report released Wednesday. (AP Photo/Jenny Kane, File)

Social Security’s impending shortfall is typically discussed as if a giant meteor were unavoidably headed straight for us — tick, tick, tick — sure to wreak unprecedented havoc on the financial well-being of 71 million people. In the line of fire are retirees, individuals with disabilities, widows and orphans. The damage to consumer spending and consumer confidence would be a devastating blow to our entire economy.

We should all be concerned, but we should not despair. Absent congressional action by 2032, all beneficiaries will face an across-the-board cut of roughly 20 percent in the benefits they have earned, and which 71 million Americans currently receive every month. That’s not a guess — that is the effect of the law as it stands today.

The good news is that the calamity is entirely avoidable. And the time for decision is now.

Unlike elections past, every candidate elected to the Senate this year will be in office when the deadline arrives. Americans should therefore be asking their Senate candidates: “What is your solution for avoiding the Social Security shortfall?”

Having led the Social Security Administration under President Biden I can assert unequivocally that this is a solvable problem. I met one-on-one with senators of both parties in the course of my confirmation process. So, I know firsthand there is recognition of the problem and a desire to fix it. We cannot control meteors, but we can ensure that Social Security continues to pay 100 percent of benefits for the foreseeable future.

The endurance of this extremely popular program shows us how.

For more than 90 years, Social Security has never failed to pay 100 percent of benefits earned — every month, without fail. What’s more, Social Security does not contribute to the federal deficit because it is a self-sustained — “pay-as-you-go” — program. This means the dollars paid out to beneficiaries every month are the same dollars paid into the program by people working in our economy every month.

Social Security’s long-term balance, therefore, is very much a reflection of earnings growth across all of America’s people; from our lowest income earners to our highest.

As changes have happened over the years — in our nation’s birth rates, population, and the peaks and valleys of our economy, Congress has had to make the adjustments necessary to strengthen the program’s long-term ability to pay 100 percent of benefits.

The last big adjustment was in 1983. On the eve of a similar shortfall in the program’s on-going balance, adjustments were made — benefit cuts were largely avoided — and Social Security was put on a path of financial strength for the next 75 years. What’s more, Congress allowed the program to build up a surplus large enough to cover the retirement lifespans of “the baby-boomer” generation — that large demographic bubble which they knew was coming.

But then big changes happened after 1983. These changes were the product of human choices — political choices, not a meteor, not longer life spans. The big unanticipated change was income inequality — the consequence of tax cuts for the very wealthy, combined with policy choices to hold down and suppress real wage growth for everyone else. This choice was called “trickle-down economics.”

For the next 40 years, incomes for 90 percent of us barely kept pace with inflation while incomes for the highest earners grew as rarely before. As a result, fewer dollars than anticipated were paid into Social Security’s Trust Fund. So now, the Social Security Trust Fund Surplus — instead of lasting through the retirement bulge of the baby-boomers — is projected to run out in 2032.

But there’s no reason it has to run out.

When Americans learn that there is no Social Security payroll tax applied to any dollar earned above the current cap of $182,000 a year, many are surprised.

That’s because 94 percent of us do not make more than $182,000 annually. But people quickly see that this “cap on taxable earnings” means a person who makes a billion dollars a year pa