Elizabeth Warren Can't Save Social Security

Kevin Glass | December 25, 2013 4:51 PM

There's been an odd prevalence for some on the left - Elizabeth Warren, for example, and Paul Krugman - to be promoting Social Security as a government program we should be spending

more money on, despite its current and future drain on the federal deficit. While the program is ripe for reform - and some reforms that would indeed spend more money on certain demographics - the idea that expansion is more important than true fiscal reform at this point is completely wrong.

The Committee for a Responsible Federal Budget writes about this odd phenomenon:

There is no question that the United States could benefit from improvements to its retirement system, including regulatory, tax, and spending changes across multiple programs.
But one of the major threats to retirement security is the looming insolvency of the Social Security program. The program’s finances must be fixed in order to fully fund benefits and give workers the ability to plan and prepare. Such a fix could increase revenue coming into the system, slow the growth of benefits being paid out, and even offer some targeted benefit enhancements to those who truly need them.
But "retirement security" cannot be used to offer everything to everyone at little to no cost. That type of thinking will lead to stalemate; and as we've explained before, the longer we wait to reform Social Security the bigger the problem becomes and the harder it is to fix it.

The urgency of actual deficit-cutting reform to the Social Security program gets more urgent by the day. And as Economics 21's Charles Blahaus writes (via Jim Pethokoukis, the value of real Social Security benefits per person is set to increase significantly in the coming years, pushing an already-unsustainable program into a true crisis.

Partisans sometimes apply the misleading terminology of “benefit cuts” to proposals to adjust benefit growth to sustainable rates, but the reality is that under virtually any plausible reform scenario, benefits will still rise in real terms relative to what seniors receive today.
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Because of how Social Security is financed (i.e., by having younger generations pay for the benefits of older generations), those now entering employment can expect to lose over 4 pecent of their lifetime wages (net of benefits received) through the program under current law. For younger Americans, the program will subtract lifetime income and reduce economic security.

Social Security reform is necessary. The solutions offered by Senator Elizabeth Warren and others on the left would make the problem worse before it gets better.