Social Security Is Stuck in the 1930s — That's Why It's Going Bankrupt

The 2016 Social Security Trustees’ Report dropped on Wednesday, emphasizing what most Americans already knew to be true — that the big government program is going bankrupt. The expiration date is 2034, almost exactly 100 years after it was instituted in 1935.


According to the youth organization Generation Opportunity, one of the main reasons Social Security is aging into extinction is because its DNA dates from the Cretaceous. Americans in the 1930s approached retirement in an entirely different way than we do today, and that really matters for a retirement program.

“There is little debate over whether Americans have improved on almost everything else that was designed in the 1930s, it should be obvious that there are better options for retirement, too,” Generation Opportunity Economic Policy Analyst Al Downs told PJ Media in an email statement. “The federal government’s role in providing retirement support must be completely rethought.”

Downs referenced the historic situation which led to the birth of this expensive government program: “The Social Security program was instituted in 1935, when the average life expectancy was 62. At that time, only 22% of the labor force was comprised of women. Back then, it was assumed that women would have to rely on their husband’s income in order to sustain themselves if their husband should die before them.”

But today, the situation is entirely different. “According to the Department of Labor, 57% of the workforce is currently made up of women. Relying on husbands for financial security is a thing of the past. Social Security belittles the role women now play in controlling their own futures and finances.”


Furthermore, the last major reform to Social Security came in 1984. Since then, Downs noted, “we defeated the Soviet Union, ditched the LaserDisc, and every millennial entered adulthood. Despite all this change, the 2016 Social Security Trustees Report echoes the message of looming fiscal crisis included in every such report since 1985, while offering even more clarity on the nature of the problem.”

Social Security is the single biggest program in the federal government, and it will cost $929 billion this year alone.

The Social Security trustees’ report finds that if the trust fund runs dry in 2034, the program would only collect enough in payroll taxes to pay 79 percent of benefits. Social Security and Medicare are the two largest federal benefit programs, and while President Obama has proposed expanding the program, doing so would only drive up costs — and our deficits.

Downs had a different idea. “Lowering payroll taxes would provide millennials the freedom to choose how best to use more of the money they earn today,” he argued, noting that “our generation is already saving at higher rates than older cohorts so the demand for government assistance in old age will almost certainly be less.”


He advocated both decreasing benefits and altering the current payout calculation structure. “The program needs reform — not fantasy and empty promises such as the president is peddling,” Downs argued. He emphasized that millennials are “each estimated to put $400,000 into Social Security over our working careers, yet the program is going to be insolvent in less than 20 years.”

For median-income earning millennials retiring in the year 2060, the estimated Social Security contribution is $466,000. How much of that will they ever see? Many of us don’t expect to get any of that back.

Next Page: So why is reform so hard to achieve?

Despite the clear problems with the current system, entitlement reform has constantly met roadblocks in Congress. When President Bush pushed reform in the 2000s, Democrats stonewalled it. This chilling scene deserves to be remembered.

But even today, Downs noted, “very few Members of Congress are willing to take on this issue. Of the handful of reforms that have been formally introduced, none of them make the fundamental reforms necessary to secure permanent solvency and increase retirement freedom for today’s young people.”


“The biggest hurdle is partisanship, not ideology,” Downs argued. He noted that “too few members of either party [are] willing to take a stand on this issue without the support of their respective party’s establishment.” Even the most touted “anti-establishment” candidate, The Donald himself, has opposed cuts to Social Security.

Even though partisanship may be the biggest block to entitlement reform, much of that struggle is rooted in ideology. Republicans and conservatives see the problem as ever-expanding government, and say the solution is to scale back benefits and update the system. Democrats and liberals see the problem as a lack of funding for vital programs, and support higher taxes to expand the programs even further.

Both sides should be able to agree to some form of modernization, however. The age of retirement has increased in the past 80 years, and medical advances have also increased life expectancy. At the very least, these factors need to be taken into consideration for how the system is to work, going forward.

Downs did provide one reason to hope for reform: “The situation is significantly more dire now than it was 10 years ago and young Americans in particular understand that.” Nevertheless, “it will still take enormous grassroots political force to reform Social Security.”


No matter who wins the presidential election in November, this will be an uphill battle. Trump has promised to cut taxes, but he also shows now signs of budging on entitlement reform, much to the chagrin of House Republican leaders like Paul Ryan. Clinton is also unlikely to reform these programs, and even if she did, it would certainly come at the cost of expanding them even further.

It will take true leadership to modernize these huge entitlement programs, and the crisis is only getting worse.



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