Politicians on both sides of the aisle know Social Security is the third rail of American politics. That is why there are so few attempts to reform and modify this program that benefits senior citizens, the disabled and families who lose a breadwinner. In 2024, 67 million people collected some kind of benefit. Social Security is the foundation of retirement security for most citizens, and any program changes impacting benefits or revenues is generally viewed with understandable suspicion and hostility.
There is an old joke that rings true: The federal government is a big insurance company with a military. At the same time, every intellectually honest lawmaker understands the unsustainability of the federal budget and recognizes the need for reform. But even as President Donald Trump and Elon Musk repeat buzzwords like “efficiency” and “reform,” it appears unlikely that this Congress will be able to come up with — let alone pass — necessary, productive and bipartisan changes.
There is an old joke that rings true: The federal government is a big insurance company with a military.
Congress is now fully engaged in the budget reconciliation process, which could include changes to entitlement spending, including Social Security, Medicaid and Medicare. Congressional Republicans know the dangers here. Recent polling confirms cutting Medicaid is unpopular; and fears over the fate of Social Security remain high.
Trump said, as recently as this week, that neither Social Security nor Medicaid would be cut in the House budget bill. Meanwhile, Sen. Lindsey Graham told reporters on Wednesday that Republicans might be targeting work requirements for Medicaid eligibility.
We will have to wait and see what suggestions come out of the committee meetings next week. But I’m not optimistic.
Alan Greenspan led the last successful effort to reform Social Security in 1983, with the support of President Ronald Reagan and a Congress led by Democratic Speaker Tip O’Neill. In 2005, President George W. Bush attempted to reform Social Security but faced fierce opposition. The centerpiece of his proposal was voluntary personal retirement accounts, which would have moved many Social Security beneficiaries away from the pay-as-you-go, defined benefit model to a partial defined contribution model.
The last serious effort to reform Social Security and other entitlement programs occurred in 2010 during the Obama administration (and when I was serving in the House). Obama’s Simpson-Bowles Commission suggested raising the cap on wages subject to the Social Security Payroll (FICA) tax. It also recommended progressive indexing for the cost-of-living adjustment (COLA) for Social Security beneficiaries.
I believe these two reforms would have contributed significantly to the sustainability of Social Security. Of course, Congress rejected the Simpson-Bowles report.
With the federal debt clocking in at $36 trillion, the day is coming when lawmakers will be compelled to act, possibly forced by some external crisis like severe turbulence in the bond market. To save Social Security, Democrats will need to recognize changes to benefits must be on the table for consideration, and Republicans will need to be open to new revenues. Doing nothing is not an option and will in fact lead to a massive benefit cut should Social Security go insolvent.
The bad news is federal health care programs like Medicare and Medicaid may be very difficult to comprehensively and safely reform given their projected high rates of growth. I think the good news is Social Security, though facing insolvency in several years, is a more manageable and fixable problem than Medicare and Medicaid.
Sadly, the partisan reconciliation process winding its way through Congress will likely not deal in any significant way with Social Security. Instead, I predict it will focus primarily on extending the 2017 tax changes. The only way to achieve durable, sustainable changes to Social Security and other entitlement programs is through bipartisan compromise. Today’s polarized, toxic politics won’t allow such collaboration.
But it shouldn’t take a financial crisis to force the country to address our nation’s unsustainable debt — or the broken state of American political discourse.