Political pressure will almost surely force Washington to shore up the Social Security program before the social safety net program faces reduced monthly checks as soon as 2033.
But the question is when.
Will lawmakers mobilize in the next few years, or will they wait until the proverbial last minute — and pay increased costs because of that delay — before finding a compromise?
The bad news for recipients is that recent history, not to mention rhetoric on the 2024 campaign trail, suggests that procrastination may win out.
Washington has made two runs at reform in recent years — one under George W. Bush and another under Barack Obama — but both came up short. That’s led some to look further back for lessons about how this coming standoff could play out.
Perhaps the most apt historical comparison is what happened in 1983. That was the last time lawmakers successfully implemented large-scale reforms to stave off insolvency in the program. What’s also notable about that Reagan-era deal is that it barely came together in time.
Reduced checks were looming in July of that year. The pact was signed into law in April.
“’83 was a crisis,” noted Bipartisan Policy Center chief economist Jason Fichtner, suggesting that perhaps a lesson from the episode is that “it seems to take a crisis” before anything gets done.
Fichtner formerly worked at the Social Security Administration and also on Capitol Hill. He is now trying to prod lawmakers to act, noting that delayed action does more than increase worry among program participants. It also makes it harder to solve the problem.
Washington’s delays have already removed what Fichtner calls “one-and-done options,” with a steeper challenge remaining.
“I start seeing this now as a jigsaw puzzle,” he said, with multiple tough pills likely to be needed as part of any eventual solution.
A 2023 Brookings analysis pegged the changes required to right the system over the coming decades as already “at least double” what lawmakers faced in 1983.
And a recent Social Security trustees report also underlined the unforgiving math in the years ahead.
By 2033, Social Security may only be able to pay out 79% of benefits to seniors unless lawmakers act. Lawmakers may be able to use a maneuver and delay things until 2035, but there are few options after that beyond reforms.
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What happened in 1983 — and Biden’s role
The US was in a similar position roughly 40 years ago. Like now, many in Washington in the late 1970s and early 80s saw the problem of insolvency coming in advance.
It was prominent in the 1980 campaign. Then, after Ronald Reagan took office, the issue was squarely on the desk of his chief of staff, James Baker.
A recent biography of Baker unearthed how in 1981, even with insolvency just a few years away, the first order of business was another round of brinkmanship.
The key early move — as recounted by Peter Baker and Susan Glasser in their biography of “The Man Who Ran Washington” — was a White House plan from David Stockman, Reagan’s budget director.
Stockman proposed making the program solvent through the GOP preferred method of cuts, identifying reductions of $100 billion. It would have slashed benefits significantly.
“That quickly flopped,” Baker and Glasser wrote, as Democrats attacked the plan and even Republicans soon abandoned Reagan on this issue.
It was only then, in December 1981, when Reagan created a National Commission on Social Security Reform. Alan Greenspan, who later in the decade became chairman of the Federal Reserve, was chosen to head it.
The group was tasked with studying the issue for a year, conveniently putting the topic on the back burner until after the 1982 elections.
By 1983 the issue was unavoidable. The Greenspan Commission finished its work — with many final negotiations taking place at Baker’s house — and produced a plan that passed Congress and Reagan signed into law on April 20, 1983.
The legislation reshaped the program and staved off insolvency by increasing the payroll tax…
Read More: The coming Social Security fight could be 1983 all over again [Video]