by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Social Security reform is no longer in vogue these days, even on the right. Across the political spectrum, ignoring the program’s fiscal challenges and design flaws is now taken to be politically astute. It isn’t hard to see why: Turning a blind eye to problems that can only be addressed by expending political capital has short-term appeal. Being irresponsible is easy — until it comes time to pay the price.
While we ignore the program’s ills, that price keeps growing. Social Security’s finances continue to worsen, as has the overall fiscal capacity of the federal government. Labor markets and social and demographic conditions continue to diverge from the assumptions that originally underpinned the program, and policymakers continue to miss opportunities to build considerable savings for the poor through financial markets.
But the past few years were not wasted entirely. I served as deputy commissioner for retirement and disability policy at the Social Security Administration (SSA) from July 2017 through January 2021, where my colleagues and I were able to develop some ideas, data, and research to inform future reform efforts and strengthen Social Security. Our research reveals that Social Security plays a relatively smaller role in the financial security of older Americans than commonly thought, making reform easier from a policy perspective, if not politically.
No such reform is remotely likely in the Biden era. Would-be reformers should use this time to prepare the ground for essential arguments to come. …
… In 2021, the average worker paid $3,662 in Social Security payroll taxes; the maximum for employees was $8,853, or $17,707 for the self-employed. The only workers exempt from paying Social Security taxes are those covered by qualified state- and local-government pensions deemed sufficient. Currently, about a quarter of the state- and local-government workforce — primarily teachers, police, and firefighters — are exempt.