Game Changer: Biden Guarantees No Changes in Social Security

A permanent two percent cut in Social Security contributions doubles the 75 year projected shortfall. Scrapping the cap (eliminating the $106,800 maximum on earnings), tonally eliminates the shortfall today. If FICA is cut by 2 percent, scrapping the cap gets Social Security only halfway there.

The pressure to cut Social Security in a slow, gradual way for younger workers will be enormous.
Progressives will not want to cut benefits for the low-income – and they shouldn’t be cut; they should be increased. Despite the fact that there are few beneficiaries who do not desperately need their Social Security – 2/3rds of the elderly and 70 percent of people receiving disability benefits rely on Social Security for half or more of their income and most people think even more people will be dependent on it in the future – nonetheless, means-testing Social Security will become a viable option. (Eliminating the benefits of those who don’t need them will make no difference to the solvency of Social Security, but will introduce administrative complexity, because it will require everyone claiming benefits to reveal their income and assets, to show they are of insufficient means to get by without it, and will destroy the universal, insurance nature of Social Security.) Changing the benefit formula in the manner proposed by a majority of the Catfood Commission, will appear attractive, even though it would gradually and inexorably eviscerate the benefits of the middle class, and with it, their support for the program.

Conservatives, from the moment Social Security was introduced in 1935, resisted a highly redistributive middle-class program, based on insurance principles. Throughout the past 75 years, they pushed for a program that mainly helped only the very poorest Americans by providing either a means-tested program or a low level of benefits for everyone, if they had to, paid from general revenue, but Democratic politicians were too smart to fall for that. They recognized that, not only did the middle class, not just the very poor, need economic protection in a capitalist system, but also that only programs that had broad based support, which provided meaningful benefits to the middle class, could offer meaningful benefits to the poor, as well. They understood the adage that programs exclusively for the poor made poor programs. One Democrat who understood this all very clearly was the one who created Social Security: President Franklin Roosevelt.

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