Back in the 1980s, the last time that Congress was able to agree on changes to Social Security, U.S. Sen. Daniel Patrick Moynihan (D-NY) coined a pivotal axiom about consensus building: You are entitled to your own opinion, but not your own set of facts.
That principle has long since been abandoned in the discussion about Social Security as politicians, regardless of party, are happy to lose fact check after fact check as their claims get more absurd by the day.
Moynihan was right, every debate must have a framework of fact on which consensus can be built. Social Security reform drifts with time because it lacks that fundamental foundation.
In the past election cycle, Kamala Harris and Donald Trump served as the yin and yang of Social Security reform. They appear to be opposites, but both are essentially the same integral parts spinning yarns in an endless cycle of inaction over the program’s future. Both are happy to lose fact checks over statements that even to the untrained eye are little more than Big Foot sightings.
For reasons beyond understanding, voters give politicians a lot of latitude on facts about a system on which millions depend. Policy experts, on the other hand, should not be given the privilege of creating their own set of facts. The people who lead the discussion need to demonstrate an understanding of the problem before they offer solutions.
As an example, many politicians claim that money set aside for Social Security benefits has already been spent on earmarks, bridges and wars. Moreover, they claim that all that is left in the program’s coffers are worthless, non-negotiable IOUs.
It all sounds quite sinister, but it is not necessarily true. In reality, Social Security hasn’t generated a penny of excess cash to spend on anything other than benefits since 2010. Every penny collected in payroll taxes has been distributed to eligible beneficiaries. That is what your hard-earned taxes were spent on.
If the root cause of Social Security’s financial imbalances stemmed from a raid on the reserves, things would at least stabilize given there is no longer any money left to raid. However, the problem we face has roughly doubled since that time.
At the end of 2023, the Trust Fund held $2.75 trillion in reserves. From inception to the end of 2023, the program collected $2.6 trillion in interest and interest on interest.
Interest is money that Congress contributed to the program. It is the cost of time. So, Congress didn’t use the money in Social Security to buy a tank or a bridge. It used the money to pay for time between right now and when the budget could afford to pay for it.
Keep in mind, one of the reasons that Congress couldn’t afford the bridge or a couple of extra tanks is because lawmakers have allocated nearly $1 trillion in cash to Social Security from the general fund over the past few decades. Importantly, that is money Congress has shifted from other things, like infrastructure and national defense, to Social Security.
Congress isn’t raiding Social Security. It is propping up the program with general fund subsidies that come at the cost of those other things that voters want and the nation needs.
While there is no evidence that Congress misused the money dedicated to Social Security, the legend grows every year and serves as a substantial impediment to consensus building because few voters will buy into benefit cuts or tax increases when they believe that Congress can just put the money back into the Social Security Trust Fund.
So, how did we really get here? In 1977, Congress set Social Security on auto-pilot, which expands the program every year based on the performance of the economy. The process is called wage-indexing, one that has driven an ever-growing gap between what is promised and what can be paid.
That gap is $22.6 trillion, a figure which means that for every dollar the program has ever collected in revenue, the system has created more than a dollar in promises that it does not expect to keep. That relationship doesn’t sound like a Trust Fund problem. It sounds more like another politicians-making-promises-they-can’t-keep problem.
Instead of thinking about a real problem as Moynihan would have preferred, voters are now more divided, with too many stewing over Big Foot sightings.
Brenton Smith is a policy advisor with The Heartland Institute.