On Jan. 3, the best proposal I’ve seen for making Social Security secure was made public.
You didn’t notice?
Don’t feel badly. Few did. Even today it has received minimal media coverage.
Yes, lots of more commanding stuff is going on.
But this is important. Instead of declaring, again and again, that Social Security is heading to a crisis, or that benefit reductions are inevitable, the proposal – submitted by Maryland Democratic Rep. Steny Hoyer but constructed by economist Wendall Primus — does something different
The plan weaves a subtle web 17 different provisions. Some increase taxes. Some decrease benefits. Some move revenues in a useful way. Some are big. Some are tiny. Some work quickly. Others take longer to have effect.
But taken together, this proposal provides the greatest benefits and security at a level of change few will notice, let alone protest. It even increases the Social Security trust fund balance over the next 75 years.
That isn’t my opinion. It’s the conclusion of Steven Goss, the Chief Actuary for Social Security. He’s in charge of evaluating all proposals for changes to the Social Security program.
In 2024 there were 6 of them. As someone who’s studied Social Security, I’ve been reading them for years. I’ve also suggested to readers that they can go online and jigger with a menu of proposals to build the kind of solution they’d like to see.
It isn’t easy.
But the Hoyer/Primus proposal is the first I have seen to make use of the differences in life expectancy and working career lengths experienced by workers at different ends of the wage/education scale. It allows lower wage workers to retire relatively early without being penalized. And it lengthens the calculation base for higher wage workers who are likely to have less physically demanding jobs and to have work they can do for more years.
The life expectancy differences are dramatic. In 1930, for instance, male workers at age 62 in the top quintile (top 20 percent) of earnings could expect to live 22 years, 8.4 years longer than the life expectancy at 62 for workers in the bottom quintile (bottom 20 percent) of earnings. By 1960, the expectancy gap had grown to 10.3 years.
The same pattern, but with smaller differences, was found for female workers, with highest quintile workers having a 6.4-year expectancy difference over lowest quintile workers.
Is the Hoyer/Primus proposal a free lunch? Sorry, no.
For higher wage workers the basis for calculating benefit levels will be 40 years instead of 35. Over the next 75 years, the burden of employment tax collections will rise from 4.59 percent of GDP to 6.81 percent of GDP in 2098.
While the tax burden for supporting Social Security will rise, it seems a small price to pay for providing retirement income security to workers and retirees, young and old.
It compares well with benefit reductions projected at 21 percent of benefits in 2033 if the boneheads we’ve elected continue to ignore the problem.
Are there caveats? Of course.
When I called Laurence J. Kotlikoff, the Boston University economist who created generational accounting with economist Alan Auerbach at U.C. Berkeley, he was quick to point out that financing Social Security will still be a problem.
Why? Because the true time horizon of Social Security is longer than 75 years. He added that it was time for a complete reformation of the impossibly complicated system of Social Security rules that interacted with each other, not to mention state and local taxes.
(Full disclosure: I’ve co-authored three books with Kotlikoff, two of them for MIT Press, and I believe that generational accounting is a wonderful tool for exploring how different tax policies effect different age groups.)
Will that day of complete reform ever come?
Ironically, it’s more likely today than it has been for years. It’s one of the few things both parties would agree on if they could put sanity ahead of posturing.
Until then, however, when someone shows how to kick the can 75 years into the future, everyone needs to take notice.
Read the analysis of the proposal here. Then see if whoever you voted for has.
Related columns:
Scott Burns, “The Fun Way to Make Social Security Solvent,” 10/1/2023: https://scottburns.com/the-fun-way-to-make-social-security-solvent-2/
Scott Burns, “Can We Fix Social Security,” 11/5/2023: https://scottburns.com/can-we-fix-social-security/
Scott Burns, “The Longevity of the Nerds,” 1/24/2016: https://scottburns.com/longevity-of-the-nerds/
Scott Burns, “The Longevity of the Nerds, Continued,” 6/4/2022: https://scottburns.com/nerds-are-living-longer-witness-the-mit-class-of-1962/
Search for all columns on Social Security: https://scottburns.com/?s=Social+Security
Sources and References:
Social Security evaluations of proposals for changes to Social Security: https://www.ssa.gov/oact/solvency/index.html
Social Security Trustees 2024 Report Summary: https://www.ssa.gov/oact/trsum/
Evaluation of the Hoyer/Primus proposal by Social Security Actuaries: https://www.ssa.gov/oact/solvency/HoyerPrimus_20250103.pdf
Alicia Munnell, Center for Retirement Research, “Here’s a Proposal to Fix Social Security that We Could Enact Today” 1/29/2025: https://crr.bc.edu/heres-a-proposal-to-fix-social-security-that-we-could-enact-today/
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo: Scott Burns, a village house seen along the Camino de Santiago, June 2024
(c) Scott Burns, 2025