Opinion: Political leaders must prioritize Social Security reform now

The vice presidential debate covered dozens of issues, and the candidates often framed each topic — from immigration to inflation — as a “crisis.” But there is one crisis our country is facing that failed to earn a single mention, in the vice presidential showdown and September’s presidential debate: Social Security.
By 2035, Social Security as we know it will largely be insolvent. If we want to fix the issue, it’s time for our parties’ leaders to reform the program so it can be around for the long run for all Americans. The financial health of our country and its retirees depends on it.
Eleven years may seem like a ways off. However, lawmakers can’t claim we didn’t see this coming. In 2009, the Social Security Board of Trustees predicted that the Old-Age, Survivors, and Disability Insurance Trust Fund would be depleted by 2037. In 2015, they said 2034 would be the depletion date. Five years later, the Trustees projected an insolvency date of 2035. The crisis is approaching, and lawmakers must contend with this reality.
The crisis can largely be boiled down to one trend: There are not enough workers paying in to support the current system. When Social Security was enacted, the ratio of workers to retirees was 5 to 1. Today, it’s 3 to 1, and it’s quickly on its way to 2 to 1. The program was not designed to handle mass retirements.
And while our country should do more to reward work, retirement is a milestone also worthy of recognition. It takes planning, discipline and determination to reach retirement. If you ask a lifelong factory worker in St. George or a career insurance agent in Lehi when they plan to retire, they can probably tell you down to the month when they will put the 9-to-5 behind them. But if today they happen to be 55, they will face an immediate 17% cut in Social Security benefits when they retire in 2035, unless Congress acts now.
There is, however, a simple fix that would restore solvency to Social Security. The origin of our crisis goes back to 1977, when the U.S. economy was ravaged by high inflation and high unemployment. The formula used to calculate Social Security benefits at the time actually overcorrected for inflation, and the benefits became so large that Social Security was, like today, facing a near-term funding crisis.
In response, Congress changed the formula to “wage indexing” for Social Security benefits. This meant that as average wages grew in the economy, so would the Social Security benefit. Retirees would be adequately protected from inflation, and the short-term funding crisis would be abated. All was well, it would seem.
But that is not what happened. Even the commission that Congress had convened at the time, under Harvard Professor William C. Hsaio, realized that wage indexing would lead to chronic deficits for Social Security given the aging population. For this reason, the Hsiao commission recommended using “price indexing”: indexing Social Security benefits for the average growth in prices, rather than wages. Since prices typically grow more slowly than wages, the benefits would not grow as rapidly, but retirees would still have adequate inflation protection.
The implications of this simple change are drastic. Had price indexing been implemented under Hsiao’s proposal, Social Security would have run surpluses every year from 1982 to 2023 except for 2021. There would have been temporary shortfalls starting in 2024, but by 2044, Social Security would have been running surpluses again. Surpluses in Social Security could permit a reduction in payroll taxes, or some of the revenue raised from payroll taxes could be used to support Medicare, which is also running large deficits.
Social Security is the federal government’s largest program, and even the smallest reforms will be felt by all taxpayers. But its cliff is fast approaching, and our political leaders cannot tell taxpayers they didn’t see it coming. For the sake of all American workers, it’s time for D.C. to get serious about solving this crisis.
Alex Durante is an economist at the Tax Foundation, a research organization in Washington, D.C.