NIRS Chief Says SS Requires Political Will to Fix It, Not Reinvention
FYI Week of April 11, 2025
Dan Doonan, the executive director of the National Institute on Retirement Security (NIRS), reminds us that Social Security (SS) has delivered four decades of predictable and stable costs and benefits, pointing out what a “remarkable achievement” this is in a constantly evolving economy. Doonan says needed reform does not present a “crisis of complexity,” but rather “an easily solvable math problem (at least for the folks at the Social Security Administration).” In a recent opinion piece in Forbes, he calls for a little more appreciation for “the quiet success story that Social Security has provided us since 1983,” and says it is time to “just fix it already.”
Doonan begins by acknowledging that there is a “looming mismatch” between SS revenues and expenses – due in large part to the fact that people are living longer and having fewer children — and that this narrative makes it seem like the system is in constant need of reform.
However, as he points out, SS contribution rates today are based on calculations that shaped the 1983 reforms more than four decades ago. At their core, Doonan says, “was a mandate to stabilize the system for the next 75 years.” In short, the actuaries at SSA were required to calculate the contribution rates needed from workers and employers to keep the program balanced for decades into the future.
Prior to the 1983 amendments, Congress passed 17 contribution rate increases between 1950 and 1983. The 1983 Act changed that, in that it meant “making projections about an entire generation’s worth of economic and demographic change,” Doonan stresses. Questions that SSA had to deal with Included:
- How long would people live?
- How many children would be born?
- How much immigration would there be?
- How fast would wages grow?
- How much of the nation’s income would remain under the payroll tax cap?
[By way of background, the 1983 Social Security Amendments addressed the program’s long-term financial challenges by, among other things, gradually increasing the retirement age from 65 to 67 over a 30-year period; accelerating the scheduled increases in payroll taxes; taxing SS benefits for higher-income individuals; and extending SS coverage to new federal employees.]
And SSA “nailed it,” as the title of the Forbes article puts it. In fact, the only thing they missed was the “largely unforeseen transformation in how income is distributed in America,” Doonan explains, whereby the percentage of all wages subject to SS payroll taxes — about 90 percent in the 1980’s — has dropped to around 82.6 percent today, as more income has shifted above the taxable maximum.
The bottom line? Times have changed – with a gallon of gas costings 96 cents in 1983 – “but we continue funding Social Security based on the financial projections done at that time,” the NIRS chief points out. SSA’s projections “produced stable costs for a vital program that are projected to be adequate through 2033, a full 50 years after the math was done,” Doonan underscores.
“So, why all the constant doom and gloom,” he asks. Yes, he says, the economic changes that took place beginning in the 1980s “knocked us a bit off course.” However, “the SSA has been telling us about this shortfall since 1990 and policymakers just haven’t acted,” Doonan states.
It is time to act, he says, stressing that “[o]ver time, benefits and revenues need to line up. That’s it.” Furthermore, he points out that “the adjustments needed to close the gap are not draconian.”
Finally, Doonan says the issue “really isn’t partisan among voters,” noting that “Americans are pretty united on a possible solution.” He is referring to the results of a recent report produced by the National Academy of Social Insurance, AARP, the U.S. Chamber of Commerce and NIRS – “Social Security at 90: A Bipartisan Roadmap for the Program’s Future” — which found that, as summarized by NIRS:
- Americans are united in support of Social Security. Across party lines, generations, income, and education, Americans value Social Security and see it as the cornerstone of retirement security. Just four percent of Americans say it will not be important to their income in retirement.
- Rather than closing Social Security’s financing gap through benefit reductions, Americans strongly prefer bringing more revenue into the system. Eighty-five percent say we should ensure benefits are not reduced, even if it means raising taxes on some or all Americans. The most strongly preferred of all options tested is eliminating the cap on payroll tax contributions for those earning more than $400,000 per year. Additionally, Americans across all groups, including a majority of Republicans, say they are willing to pay more themselves by gradually increasing the payroll tax rate to strengthen the program’s finances.
- Americans are broadly opposed to benefit reductions. Given a broad set of options to address Social Security’s financing gap, respondents reject benefit reductions such as further increases to the retirement age or switching to a slower cost-of-living adjustment.
- Americans want to strengthen Social Security benefits. They support several targeted improvements including adding a caregiver credit for workers who take time out of the workforce to care for young children and a “bridge benefit” to protect from the early claiming reduction of those in physically demanding jobs who may be unable to continue working up to full retirement age.
- Americans need and value Social Security’s disability benefits. Ninety percent of Americans say that they will need Social Security’s disability benefits if they become disabled and unable to support themselves through work, and only four percent support cutting disability benefits. The survey also finds strong bipartisan support for updating outdated rules in Supplemental Security Income, including its $2,000 asset limit.
“So yes, it’s time,” Doonan concludes: “Just fix it already.” As he explains, “[t]he program doesn’t need reinvention. It needs political will, a bit of courage, and a basic respect for math. And maybe, a little more appreciation for the quiet success story that Social Security has provided us since 1983.”
Thank you for the plain talk, Dan!