The hot potato no one wants to touch

As Congress continues to struggle with our nation’s massive $15 trillion debt, another looming crisis has slipped off the radar screen: Social Security.

Social Security is running almost $50 billion in the red each year, deficits that are being covered by reserves in the General Fund. But because the number of people getting benefits is outpacing the number of people footing the bill, the program will be insolvent in 20 years.

Social Security started in 1935 as a sort of widows and orphans fund. The boss and worker each paid a 1 percent tax on the first $3,000 of earnings. Today, the tax is 10.4 percent on the first $110,000 in earnings — and it’s still going broke.

What’s the problem?

Social Security worked back in the ’30s because the average life expectancy was 58, and benefits didn’t kick in until age 65. In other words, it worked because not many people lived long enough to collect it.

That has changed.

Today, people are living longer and retiring earlier. Life expectancy for a child born in 2010 is nearly 79 years and the average retirement age in America today is 62.

In 1935, when Social Security began, there were roughly 16 workers for every beneficiary. Today there are just 3.3 workers per beneficiary and officials project that in 18 years, there will be just two workers paying for each person collecting Social Security benefits.

Couldn’t Congress just dip into that famous Social Security lockbox and solve this problem, or at least delay the train wreck? No, because over the years, Congress has raided the Social Security fund to pay for other things. The lockbox is empty. In fact, the federal government owes the Social Security Trust Fund about $3 trillion.

If we’re going to save Social Security, little changes like nudging up the tax rate and retirement age won’t be enough. Steep increases in the payroll taxes aren’t an option either. Struggling state and local governments want to impose new taxes and fees on employers, hospitals and families to bail them out. We couldn’t hike Social Security taxes high enough to solve the problem.

So, we’re going to have to look at changing the benefits. But historically, such suggestions have hit a brick wall.

Remember when President George W. Bush put Social Security solvency on the front burner right after being reelected in 2004? The resulting firestorm of opposition forced him into silence. Nobody has dared to suggest changes since. It is simply too hot a potato to toss onto the table.

If we’re looking for someone to blame, we should look in the mirror. Faced with an inevitably bankrupt social program, we steadfastly refuse to consider any changes or reductions in benefits and we howl in outrage if a politician suggests it.

Most elected officials are so cowed by voter outrage that they’re refusing to even address the problem. But Congress must rethink how benefits are paid. For example, today a 66-year old working full-time and earning a six-figure salary can collect Social Security.

A lot has changed with Social Security in the 77 years since its inception. The math worked back then — it doesn’t work now.

If we don’t change our attitude about adjusting the program and reducing our benefits, Social Security won’t be around for our kids and grandkids. And it will be our fault.

Common sense reforms must happen in a bipartisan way. The most fertile ground is changes in eligibility. Those affected will howl, but what’s the alternative?

Don Brunell is the president of the Association of Washington Business.