Recently, Mark J. Warshawsky, senior fellow and Wilson H. Taylor Chair in Healthcare and Retirement Policy at the American Enterprise Institute (AEI), joined The Drew Mariani Show to discuss a new bill that aims to prevent a Social Security disaster.
Last month, a bipartisan group of senators introduced The Promise Act, a bill that would instruct the Social Security Advisory Board to craft reform legislation that Congress would vote upon. This comes after years of warnings about the solvency of Social Security, as well as the impending 22% cuts.
Warshawsky is skeptical of the bill’s success. He thinks it would rush a delicate process. “The quick process would likely introduce policy errors and unintended consequences and miss the chance to modernize the program,” he wrote in a piece for AEI.
Another reason for concern is the bill’s sponsors. Many of the senators are retiring, “so they’re not going to face voters,” Warshawsky told Drew.
Kicking the Can
The problems facing Social Security are well known. “We’ve known about this problem… for the last 30 years,” Warshawsky said. And the blame is bipartisan. “Both parties, Republicans and Democrats, have known it has been coming, and they’ve really pretty much ignored it,” he told Drew.
Past Efforts
The last major reform of Social Security came in 1981 when Republican president Ronald Reagan and Democratic House Speaker Tip O’Neil “agreed to set up the Greenspan Commission,” leading to the Social Security reform of 1993, Warshawsky wrote.
More than twenty years ago, President George W. Bush proposed Social Security reforms aimed at shoring up the program. Bush suggested a personal account with money from payroll taxes that would grow over a worker’s lifetime. Despite the president’s efforts, support for his proposal declined, and he abandoned it.
What Could Be Done
Warshawsky said several reforms are on the table. Those reforms include cutting benefits, cutting the indexed benefits, raising the payroll tax, or lifting the cap on the payroll tax. Some of these solutions would disproportionally harm the poor. So, Warshawsky said there’s a proposal that would cut benefits only for higher earners.
One of The Promise Act’s sponsors, outgoing Republican Senator Bill Cassidy, calls for a pension investment fund. In a recent speech, he explained that in the fund, “dollars are invested at an early stage, allowed to grow, and as those dollars grow over time, they meet the needs of the retirees as they become eligible for pulling those dollars down.”
If America is to save Social Security, time is of the essence. “The only option that should not be taken is the option of doing nothing,” Cassidy said.
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