This blog has provided a whirlwind tour through 12 presidents and approximately 80 years of American history. We have studied Social Security in depth, from its first record in 1937 of about 50,000 beneficiaries and a total of $1.28 million in benefits to 2008, with about 50 million beneficiaries and $615 billion in benefits.[1] We considered Social Security as it has moved from solvency to the threat of becoming insolvent; from just another program to the sacred "third rail" of the American political system. We conducted a comprehensive analysis and found that Social Security is best viewed through the lens of three main trends: The balance between expanding coverage and controlling costs, the increasing partisanship of approaches to reform, and the conflict between short-term and long-term solutions.
Ultimately, while we find that individual characteristics and values of presidents are important, the evolution of Social Security depends significantly on path dependency, interrupted perhaps by rare crises or windows of opportunity. Our analysis points to a few key observations for policymakers:
- Social Security has become, and will remain, a sacrosanct branch of social insurance in the American political system. Efforts to drastically decrease coverage, impose heavy taxes, or change the foundational structure of the system are unlikely to be politically feasible, and are thus prone to failure. Potential reforms must acknowledge the popularity of the program while controlling costs that will likely continue to skyrocket due to the shifting demographics of the American population.
- Increasing party polarization in the context of continued public popularity makes the stated stance of incoming presidents prone to several pressures. To establish the bipartisan consensus required for sustainable Social Security reform, presidents must be able to cross party boundaries and compromise on issues such as the amount and scope of benefits paid, the appropriate level of taxation, and the potential evolution of the pay-as-you-go system.
- Long-term solutions, such as a “permanent fix” of the Social Security system are an extremely tough in the absence of a looming crisis. Without the need to avert such a scenario, political agents tend to focus on short-term policies, reelection, and other temporary measures.
It is, in our opinion, strong presidential leadership is a necessary but not sufficient requirement to drive positive reform in Social Security. Leaders must navigate a complex web of polarized parties, politically unpopular costs and benefits recalculations and tough compromises. The solutions to Social Security are, in theory, readily available. And despite the present lack of political will to tackle this issue, we believe it is not only possible, but required of us, if we are to make Social Security solvent once and for all and prevent further crises in a social program that has become so entwined with American identity.
Thank you so much for reading our blog, and we hope you leave your comments and questions with us!
[1] Historical Background and Development of Social Security. Retrieved from http://www.ssa.gov/history/briefhistory3.html
A solid wrap-up. I'd like to see the implications pushed just bit farther: what this suggests is that a "medium-term" solution may be the best approach. By that I mean that we find a solution that may not reach the impossible goal of infinite stability, but that extends the life of the program by many decades. In other words, the 1983 reforms may be the best we can do. The one caveat, of course, is the wider problem of the deficit and how that may limit the availability of solutions to the Social Security problem, even though by itself that is far more amenable to solution.
ReplyDeleteOverall, I'm very impressed with the care and thoroughness of this blog. It is particularly strong in tracing out the complex, technical history of how Social Security has changed over time. The attention to the tension between benefit increases and program financing is especially important. More attention might have been given to the role of race in the program's formation and early decades, to the role of Congress and the relevant agencies & departments throughout, and to the question I posed a number of times about what we really mean when we talk about "long-term" solutions. Finally, I might like to see a slightly more direct recommendation at the end. Which package of solutions should Obama (or say, Mitt Romney) endorse? In general, though, congratulations on an excellent and effective presentation of a very difficult topic!
GM