Social Security isn’t broke and won’t go bankrupt. That said, a serious financial deficit looms for Social Security in the early 2030s.
If history is any guide, however, odds are that nothing will be done to shore up Social Security’s finances until then. That’s hardly reassuring news for people now in their mid-40s to early-50s who hope to start claiming then.
The kick-the-can-down-the-road view is the inevitable conclusion from a talk I recently heard by Nobel laureate and MIT economist Peter Diamond at the Retirement Research Consortium meeting in Washington, D.C. And the current political turmoil in the nation’s capital — including uncertainties over prospects for lifting the debt ceiling and funding the government after Labor Day — only reinforces Diamond’s judgment.
No imminent Social Security deadline, no imminent fix
The divide between conservatives and liberals over how to balance Social Security’s books is simply too wide to bridge without the pressure of an imminent deadline.
“Is the last-minute inevitable?” Diamond rhetorically asked his audience. “I fear the answer is: ‘Yes.’”
I find the lack of legislative action on bolstering Social Security’s finances a national disgrace. Yet, after listening to Diamond, perhaps delay isn’t the worst outcome.
I still prefer erasing the financing gap sooner rather than later. But more time lets supporters of Social Security convince voters that reducing benefits is the wrong approach — especially the conservatives’ proposal to raise the Full Retirement Age from 67 to 70. This takeaway is reinforced by Diamond’s analysis of the 1982-‘83 Greenspan Commission, the last successful effort to shore up Social Security.