Is Fixing Social Security Easy?

Erica Grieder took some hits over the weekend for suggesting that “the coming shortfall in Social Security is to some Democrats, in some small way, as climate change is to some Republicans.” And deservedly so!  After all, they’re nothing alike at all. You may or may not like the typical liberal plan for bringing Social Security into balance, but no one on the left denies that there’s a long-term solvency issue.

After conceding this, Erica then falls back to a weaker version of the claim, namely that liberals are too quick to pretend that fixing Social Security is really pretty easy:

This argument that it will be “easy” to fix Social Security has been pushed for several years, even though it’s relatively clear that any plan that requires Congress to take coordinated action in pursuit of a measure that inflicts short-term pain in favour of long-term solvency is more accurately be described as “difficult”.

I consider myself a prime pusher of this argument, so I guess I should respond. I’d push back in two ways. First, by this definition, practically anything is hard. So I don’t think this is really a useful way to think about the issue.

Second, it’s not the case that fixing Social Security will require short-term pain. Just the opposite, in fact. Most solutions phase in very slowly, and a lot of them don’t even start phasing in for another decade or two. This is really the main reason I keep saying that Social Security is a pretty easy problem to fix: not only is the Social Security shortfall fairly small, but it doesn’t require much short-term pain to make up. Most mainstream plans require very small tax increases that start in, say, 2020, and ramp up a tenth of a point at a time through 2040. Ditto for benefit cuts, which usually extend over the course of decades. (We’re still working our way through the age limit increase put in place by the Greenspan Commission in 1983.) Most people would barely even notice it.

Now, of course, in one way Erica is right about the non-easiness of addressing Social Security. But I think we should be clear on exactly what the source of the problem is here. It’s not “Congress,” and it’s not “difficulty.” It’s the Republican Party. They’re just flatly unwilling to negotiate the kind of simple, long-term plan that was perfectly acceptable to Ronald Reagan three decades ago. Instead, they insist on private accounts, but are unwilling to consider paying the transition costs. They insist on benefit cuts, but are unwilling to even talk about tax increases. These positions are crazy nonstarters and they know it, but they flatly won’t consider anything else. So there’s just no negotiation possible right now.

If you let Democrats tackle Social Security on their own, you might not like what you’d get. My guess is that you’d end up with a pretty conventional plan that had a 2:1 ratio of tax increases to benefit cuts. That is, you’d get slowly phased-in tax increases that amounted to about 1% of GDP over the next 30 years, and slowly phased-in benefit cuts that amounted to about 0.5% of GDP over the same period. It would take some haggling to get there, but it could be done.

But for now? Sure: fixing Social Security is hard. Hell, it’s impossible. But that has nothing to do with the merits of the case. It has to do with the same thing that prevents anything from getting done these days: a Republican Party that’s unwilling to face reality. I’m not really sure what the odds are of that changing anytime in the near future.


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