Tag: social security
Yes, Social Security Is Fiscally Safe -- Unless Republicans Screw Us All

Yes, Social Security Is Fiscally Safe -- Unless Republicans Screw Us All

Last week’s release of the 2025 Social Security Trustees Report provoked a lot of teeth gnashing, hair pulling, and gasket blowing about the program facing insolvency. To those of you who are freaking out, please stay calm. While pundits can make a good living promoting scare stories about Social Security, their nightmare scenarios have little basis in reality.

To be clear, the most recent trustees report does show the program will face a shortfall, so nine years from now it will not be able to pay full scheduled benefits. But it is important to get a clear picture of what that means.

First, let’s look at the numbers. Under current law, the government cannot pay out benefits if the money is not in the Social Security trust fund. Projections show that in 2034, after the bonds held by the trust fund have been sold off, the program will have enough money to pay 82 percent of scheduled benefits.

While a benefit cut of 18 percent would be terrible for most beneficiaries, 82 percent is still very far from zero. So, the idea that the program will just go away is a complete invention. Of course, Congress could vote it out of existence, but that doesn’t seem very likely given the share of Americans who are current beneficiaries or expect to be in the near future.

Another argument that deserves to be attacked head-on is the charge that Social Security in its current form is a major cause of generational inequality. While baby boom retirements substantially reduced the ratio of workers to retirees, there is little change projected for later years in this century. The share of scheduled benefits that could be paid, absent any action from Congress, would fall only modestly in subsequent decades.

Going out to 2065, when today’s 25-year-olds will be turning 65, the program is projected to be able to pay 74 percent of scheduled benefits. This would mean that, if Congress never touches the program and the projections prove correct, a lifetime medium earner would get a benefit of $30,900 in 2065, more than 20 percent higher than the $25,200 a medium earner who retires today would get (all numbers are in 2025 dollars). Where’s the generational inequality?

The fuller picture is somewhat more complicated. We expect retirees’ benefits to bear some relationship to their income while working. The benefit the program would be able to pay in 2065, absent any changes, would be a lower share of lifetime earnings than what is the case today. But then again, why are workers over the next 40 years expected to have higher lifetime earnings? It’s because they have benefited from more capital stock and better infrastructure and technology than what boomers had when they entered the workforce.

We can have a serious debate about whether the rate of increase in real wages and living standards is as rapid as it should be, but there is no doubt that we are headed in the right direction, at least on average (an important point I will return to shortly). If we want to concern ourselves with generational inequality, we should consider the condition of the planet we are leaving our kids. If we don’t do more to address global warming, the planet will be a much less pleasant place in 30 or 40 years than it is today. That would pose a very real and serious threat to young people.

How big is the funding gap?

There are two important points to make about the projected funding gap. First, it is more of an accounting problem than an economic one. Second, it is not especially large relative to other expenses the country covers.

The first point is when the trust fund runs out of bonds, as is projected in 2033, it will not create a new economic burden for the country. The government will not be paying substantially more in benefits in 2034 than in 2033, it just won’t have bonds in the trust fund to cover part of the expense.

That’s an accounting issue. The increase in spending on Social Security from 2033 to 2034, measured as a share of gross domestic product (GDP), would be just 0.03 percentage points. That’s the full extent of the increased economic burden the year the trust fund faces depletion, amounting to less than one percent of the Pentagon’s budget.

If the goal is to completely cover the annual funding gap, the projections suggest that it would require increased revenue and/or a cut in spending of a bit more than one percent of GDP (one-third of the Pentagon budget). The reason for this gap is the program has been spending more than its income for more than a decade, with the annual gap growing continually larger over this period. The bonds accumulated in the trust fund was filling this gap.

There is nothing nefarious here. It was all by design and fully public. The last major adjustment to the program in 1982 structured it to build up a large trust fund while the baby boomers were in the workforce to be spent down when they retired.

If the point is to fill the gap by committing additional revenue to the program, the government could raise the cap on wages that are taxed for Social Security (currently $176,100), increase the tax rate, or transfer other government revenue to the program, which would literally be just accounting. If $300 billion a year of general revenue (roughly 1 percent of GDP) would go to the Social Security fund, it would reduce or eliminate the shortfall in the Social Security trust fund but have no effect on the federal budget deficit as it is usually reported. In short, the government could easily come up with the money to pay all scheduled benefits.

Tax the rich

If the government decides to raise additional tax revenue to cover the Social Security shortfall, it makes sense that the bulk of it would come from wealthiest households. They have been the big winners in the economy over the last half century.

But the logic for taxing the rich goes even further. The upward redistribution over the last 50 years was a major factor in causing the program’s shortfall. In 1982, the last time Congress made major changes to the program, only 10 percent of wage income was above the cap and thus escaped taxation. Currently close to 18 percent of wage income is above the cap.

In addition, since 2000 there has been a major shift from corporate wages to profits. In 2000, profits were 18.2 percent of corporate income. In 2024, they were 28.3 percent. If corporate profits had remained at their 2000 share, the average wage in the corporate sector would be more than 12 percent higher than it is today. The combination of the upward redistribution of wage income—from ordinary workers to highly paid professionals, Wall Street types, and corporate executives—and the shift from wages to profits, explains why the program is projected to run short. That makes a good argument for modifying Social Security so that the segment of the population that benefited from this upward redistribution pays more to support the program.

There is one other point worth making about the prospects for additional tax revenue. The government could raise the tax rate. While any additional payments to support the program should mainly come from the rich, it is not absurd to think that ordinary workers could pay a higher tax rate. After all, the program is designed to support a considerably longer retirement than was the case in 1990, the last time there was any tax rate increase.

From 1966 to 1990, the tax rate on wages rose from 5.8 percent to 12.4 percent, an increase of 6.6 percentage points over 24 years. By contrast, there has been no increase in the last 35 years. If the tax were to increase, say by two percentage points over the next two decades, it would hardly seem like a major crisis. The average real annual wage is projected to be 32 percent higher in 2045 than it is today. It would be difficult to make a case that workers in 2045 would be suffering a major hardship if the government took back 2 percentage points of that increase in the form of higher Social Security taxes. We do have to worry about inequality, but for the last decade, workers at the bottom have been roughly keeping pace with average wage growth.

It is understandable that politicians running for office don’t like to talk about tax increases, but in this respect, Donald Trump can perhaps offer a useful lesson. He is now imposing import taxes—tariffs—that could well reach $400 billion a year, equivalent to a four percentage point increase in the payroll tax. He is doing this even without getting congressional approval. To date, Trump’s tax hike has prompted only limited public complaint. It is hard to believe that a tax increase half this size, phased in over 20 years, to support the country’s most popular social program would be an impossible political lift.

Social Security is a great program

On this last point, it is worth reminding everyone how incredibly popular Social Security is. It enjoys overwhelming public support across the political spectrum. Even supermajorities of Republicans like it.

The reason is obvious. For more than 80 years, Social Security has provided the country’s workers and their families a substantial degree of economic security. It even provides security to high-income workers who may not think they need it, because even highly paid doctors and lawyers may find they are no longer wealthy after a serious illness or a car accident.

The program is also incredibly efficient. Administrative costs for the retirement program are less than 0.4 percent of the benefits paid each year. By all measures, the amount of fraud in the program is minimal. Elon Musk’s Department of Government Efficiency (DOGE) team confirmed that fact. While they went in with grand promises to root out waste and fraud, they essentially found nothing and instead promoted such wildly absurd lies as 20 million people over age 120 were getting benefits or 40 percent of the phone calls to the agency were from people trying to commit fraud. (The small grain of truth in DOGE’s 40 percent figure is 40 percent of the identified instances of fraud were initiated through phone calls, which means 60 percent were either initiated online or via in-person visits.)

In short, Social Security does what it is designed to do. As much as the program’s political enemies and the news media like to hype scare stories, there is no reason it will not be around long into the future, paying out full scheduled benefits.

Dean Baker is an economist, author, and co-founder of the Center for Economic Policy and Research. His writing has appeared in many major publications, including The Atlantic, The Washington Post, and The Financial Times. Please consider subscribing to his Substack Dean Baker.

Reprinted with permission from Substack.

Donald Trump

New Polls Show Voters Rapidly Turning On Trump Over Economy

Less than 100 days into his new term, President Donald Trump and his Republican Party are hemorrhaging public support as his policies thrash the economy, threaten Americans’ Social Security and Medicaid, and blow up the rule of law.

Trump's approval rating is now well underwater, with 54 percent of registered voters disapproving of the job he’s doing as president, compared with just 42 percent approving, according to Civiqs’ tracker. Voters seem to be deeply repelled by his handling of the economy, inflation, and even immigration—an issue he's usually held an advantage on.

This is terrible news for Republicans both for critical upcoming gubernatorial elections in New Jersey and Virginia in November, and for the rest of the GOP in the 2026 midterms.

For example, a Morning Consult poll released Tuesday morning found that for the first time since 2021, more voters trust Democrats on the economy than they do Republicans, by a 46 to 43 percent margin.

"That three-percentage-point edge for Democrats—their largest since April 2021—underlines a stark unraveling for the GOP, which had come off the 2024 election with a double-digit advantage on the matter," Morning Consult wrote.

The evaporation of Republicans’ edge on economic issues comes as they defend the tariffs Trump has levied on nearly every country in the world. Those tariffs are threatening to explode inflation, sink the country into a recession, and cost thousands of Americans their livelihoods.

Even worse for Republicans is that Morning Consult found congressional Democrats are now viewed more favorably than congressional Republicans.

"For the first time since just before the 2024 election, the average voter is more likely to hold positive than negative views about Democrats in Congress (47 to 46 percent). It leaves them more popular than Republicans in Congress, whose favorability ratings are now 10 points underwater," Morning Consult reported.

A new poll conducted by YouGov for the University of Massachusetts at Amherst also finds similarly poor results for the GOP. In it, voters overwhelmingly disapprove of Trump's handling of inflation (33 percent approve, 62 percent disapprove), trade (36 percent approve, 58 percent disapprove), jobs (38 percent approve, 53 percent disapprove), and foreign affairs (36 percent approve, 53 percent disapprove). The poll also finds just 50 percent approve of his handling of immigration—often his strongest issue in polling—while 46 percent disapprove.

Meanwhile, a Quinnipiac University poll from last week found Trump underwater on immigration, with 45 percent approving of his handling of it and 50 percent disapproving.

“Despite what you’ve probably heard, Trump’s immigration agenda isn’t actually popular,” G. Elliottt Morris, a reporter who led the now-defunct news outlet 538, wrote in a post on X. “While Americans tend to approve of ‘the way he is handling immigration’ in abstract, they are very negative on the details.”

For example, voters strongly disapprove of Trump’s policy of deporting undocumented immigrants without criminal records, Morris found. They also strongly oppose sending such immigrants to foreign prisons.

Trump is refusing to return Kilmar Abrego Garcia, an immigrant from El Salvador that Trump sent to that prison known as CECOT, despite an order from the Supreme Court to do so.

“The media narrative is that ‘Trump is popular on immigration.’ But as we can see, that is not really true,” Morris wrote in a blog post. “On the specifics of his policy, and especially on the on-the-ground implementation, Americans are mostly opposed to what his administration is doing. (And the data above should probably be considered an overestimate, since the polls I've used are old and conducted before the Abrego Garcia news.)”

Ultimately, Trump is not immune to political gravity. And if voters have already soured on his agenda less than 100 days into his term, things could get even uglier for Trump and his party if he doesn’t reverse course.

Reprinted with permission from Daily Kos.

Elon Musk

Musk Wins $5.9B Spacex Contract As He Torches Social Security Agency

Tech billionaire Elon Musk’s space company was recently handed a $5.9 billion contract subsidized by taxpayers, even as his so-called Department of Government Efficiency continues to take a wrecking ball to key government agencies.

The U.S. Space Force announced on April 4 that Musk’s SpaceX was among three companies awarded government contracts for the National Security Space Launch Phase 3 Lane 2 program. Space X will receive more than $5.9 billion of the $13.7 billion in spending that was announced.

Musk is the CEO of SpaceX and owns approximately 42 percent of the company.

While SpaceX is newly flush with government money, Musk’s DOGE has been laying off critical federal workers at multiple agencies. Federal judges have ruled that some of those firings are illegal.

At the Social Security Administration, DOGE has cut 7,000 jobs even though millions of Americans rely on their Social Security payments for day-to-day living. The Washington Post reports that the agency’s website, which citizens use to access information on their benefits, has had repeated outages in recent weeks.

The Post noted that “many of the network outages appear to be caused by an expanded fraud check system imposed by the DOGE team,” according to current and former officials that they consulted. Those sources told the outlet that Social Security’s tech staff didn’t test new software installed by Musk’s group and the computer servers have been unable to handle the traffic.

The revelations come as DOGE has repeatedly lied to the public about how much the rogue agency’s actions have purportedly saved taxpayers. Musk, who is the richest person in the world, has benefited enormously from public spending while attacking and gutting agencies that provide vital services to middle-class families.

Despite Musk continuing to siphon money from the government while attacking it via DOGE, President Donald Trump has made it clear that his crony and biggest political benefactor will not be subject to any guardrails or oversight for corruption.

The arrangement has led to Musk and Trump becoming a major target of grassroots protests. Over the weekend, hundreds of thousands of people across the U.S. took part in “Hands Off” demonstrations, pushing for Trump and Musk to stop their harmful actions and encouraging other lawmakers to stop them.

Musk isn’t the only high-profile billionaire in the MAGA movement making money from the Space Force announcement. Blue Origin, owned by Amazon’s Jeff Bezos, will receive over $2.3 billion from the arrangement.

Trump recently offered praise for Bezos, who also owns The Washington Post, after the paper’s pivot in recent weeks to be more MAGA-friendly.

The stock price and revenue for Musk’s other major company, Tesla, have been sinking as he marched in lockstep with Trump. The public has expressed its revulsion and anger at DOGE’s actions even as Republican leaders continue to back the effort. [Musk has lately expressed alarm over Trump's tariff policies.]

But even while Trump’s closest billionaire allies are losing money due to his chaotic and catastrophic tariff policies, they are raking in billions from the government he now leads.

Reprinted with permission from Daily Kos.

MAGA Oligarchs Using 'Friction Theory' To Ruin Social Security

MAGA Oligarchs Using 'Friction Theory' To Ruin Social Security

Thomas Jefferson referred to the U.S. government as a "common house" that provided the people protection and stability. Donald Trump is trying to evict Americans from that comfy home by making it hard to get benefits that should be thought of as a right.

Witness the slashing of basic government services in the name of deficit reduction, or more accurately, paying for tax cuts. Elon Musk's rash firings are about more than saving taxpayers money on salaries and office rent. It's about frustrating Americans trying to obtain benefits to the point that they give up.

In economics, "friction theory" describes how governments (or other institutions) put into place unnecessary complexity, bureaucratic hurdles, or inefficiencies to discourage the public from accessing services. This can take the form of complex paperwork, or limited hours of operation to reduce demand.

It's no accident that Musk is cannibalizing the workforces that administer such benefits as Social Security and Medicaid. These are people we sometimes must talk to.

Trump started applying the friction theory in his first term to undermine the Affordable Care Act. Its purpose was to steer away the younger and healthy beneficiaries needed for a stable insurance pool.

He shortened the annual ACA enrollment period and slashed its advertising budget by 90%. He cut funding for the navigators who helped folks understand the ACA program and how to enroll in it.

He employed other means to dismantle the program. The tax cut legislation effectively repealed the "individual mandate" requiring most Americans to have health coverage or pay a penalty. By removing the penalty, fewer healthy people bought coverage. The result was higher ACA marketplace premiums to cover a riskier pool of beneficiaries.

Trump also expanded access to short-term plans that didn't have to meet basic ACA requirements, such as covering preexisting conditions. Many people opted for these cheaper plans, again leaving the ACA marketplaces burdened with a sicker population.

Unable to bankrupt the ACA, Trump then tried to kill the program outright and almost succeeded. Time to try again.

The ACA expanded access to Medicaid. Project 2025, the right-wing blueprint for a second Trump term, calls for stricter eligibility standards to decrease enrollment in Medicaid and place limits on lifetime benefits. What Project 2025 wants, Project 2025 seems to be getting.

As for the Social Security Administration, Musk's mass layoffs insert friction into the process of getting information about benefits or fixing problems. That has resulted in limited phone-based services and the shutting of local offices providing in-person assistance. The Social Security website has crashed four times in 10 days this month so far.

The MAGA slumlords now portray Social Security not as the earned benefit it is but as some kind of racket. Consider Musk's fake claims about armies of long-dead Americans still collecting benefits. And he calls Social Security a "Ponzi scheme."

Social Security faces financing challenges, but the benefits come out of taxes paid by the workers and their employers. What's not distributed to beneficiaries gets invested in securities backed by the full faith and credit of the U.S. government.

Our new commerce secretary broke new ground in portraying those claiming a missed Social Security check or incorrect payment as likely criminals. I quote Howard Lutnick:

"A fraudster always makes the loudest noise, screaming, yelling and complaining. ... The easiest way to find the fraudster is to stop payments and listen, because whoever screams is the one stealing."

Face it. The knives are out to destroy Americans' confidence in the government services that made their national house feel like home. The goal of the MAGA slumlords is to get the public to curse the program and, most importantly, go away. Frustration is their weapon.

Reprinted with permission from Creators.

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