Debt Digest | Commonsense Social Security Reforms
Links & Fiscal Facts
Here are this week’s reading links and fiscal facts:
Focus Social Security on those of limited means. Columbia’s Richard Hanania writes, “Supporters of Social Security point to the fact that the rate of poverty for the elderly has decreased over time…But so what? Here are some other things that have changed since we got Social Security: collapsing birth rates, lower male workforce participation rates, larger age gaps in wealth, and more divorce...supporters of the program looked at what happened to one variable afterwards while ignoring everything else in the world and based on that declared victory.” For Social Security to focus on reducing poverty, old age income support should be targeted toward those with limited means. Progressive price indexing and similar means to adjust the benefit formula for Social Security could save money and return the program to its original purpose of antipoverty protection in old age as Boccia explains here.
Raise Social Security’s retirement age. Since Social Security became law, life expectancy at birth has increased by nearly 20 years. Meanwhile, Social Security’s primary eligibility increased by only two years (65 to 67). As Marc Goldwein of the Committee for a Responsible Federal Budget explains, increasing the eligbility age or indexing it to life expectancy could limit cost growth. CBO estimates increasing the eligbility age to 70 would save $121 billion over 10 years.
GAO recommendations can save $100 billion or more. The nonpartisan Government Accountability Office (GAO) investigates federal spending and government program performance. Between 2001 and 2023, implementation of GAO recommendations produced $739 billion in savings. GAO estimates that adopting its current suite of recommendations could produce $131 billion of future financial benefits. See GAO’s annual duplication and cost savings report “highlighting opportunities to reduce fragmentation, overlap, and duplication in federal programs.”
Supreme Court strikes down part of Biden’s student debt cancellation plan. Cato’s Thomas Berry explains, “the Biden Administration attempted to use the ‘waive or modify’ authority in the HEROES Act to create a new $430 billion debt‐cancellation program, but creating a program of such breadth and scope is a job for Congress, not the executive branch.” Biden has stated his administration plans on introducing a “new path” to provide relief to certain borrowers.
Cut spending to the Economic Development Administration. Chris Edwards writes, “EDA spending has soared from $264 million in 2019 to $1.53 billion in 2023.” The EDA ineffectively funds local priorities that are better left to the states. Moreover, the program’s authorization lapsed in 2008. The EDA is a prime example of “zombie spending,” where reduced oversight leads to wasteful spending.
Washington is sending checks to U.S. adversaries. According to Sen. Joni Ernst (R-IA) and Adam Andrzejewski of OpenTheBooks.com, the U.S. has sent more than $1.3 billion to institutions in China and Russia for poetry projects, podcasts, and more. GAO could not determine the true amount sent to China because Washington wasn’t keeping track. The authors advocate legislation to publicly disclose and account for taxpayer money sent to adversarial countries.
Debt limit deal fails to address root cause of rising spending. The Tax Policy Center’s C. Eugene Steuerle and Nikhita Airi explain, “This budget agreement failed to touch the major items of spending growth, health and Social Security. Both remain on an unsustainable path. Instead, it simply cut discretionary spending items, both defense and non-defense, that have already been cut significantly as a share of national income over the past few decades.” See the figure below, which shows the reduction in federal spending from the debt limit deal primarily applies to the part of the budget that was already declining as a share of GDP, while the fastest-growing programs continue unabated.”
