The Social Security Phobia
In August 2025, Social Security turned 90. There were pontifications by politicians of all stripes about how important it is for hardworking Americans. President Trump pledged to “protect and preserve Social Security”, and that it “stands stronger and more resilient than ever before.”
Yet the system is projected to run out of cash in 2033, and neither the Democrats under Biden nor the Republicans under Trump have been willing to touch it.
The problem is that as our population ages, the percentage of workers to retirees eligible for Social Security has changed. That means less payroll taxes go into the Social Security Trust Fund, while the draws on the fund from Americans eligible for Social Security have increased.
One dumb thing is that there is a cap on wages of $176,000 that are subject to Social Security tax. So, if an employee makes $50,000 per year, the entire amount is subject to Social Security tax, but an employee who makes $500,000 per year would only have the first $176,000 subject to the tax. The worker with the lower salary pays more social security tax as a percentage of their income than the one with the higher salary. Social Security tax for all workers is a flat 6.2%. Employers pay a matching rate.
As far back as the George W. Bush administration, it was suggested that for extra earnings, Social Security Trust money should be invested in the financial markets. Most of the benefits of investing in financial markets have gone to the rich. As Billie Holiday said, “Them that’s got shall get, Them that’s not shall lose.” Financial market investment could be considered, but only under very limited circumstances and with safeguards that are probably not available today.
Additional solutions are available. It’s easy to understand why politicians don’t bring them up. To balance the system, retirement age eligibility must go up and/or benefits must decrease. On the other hand, Social Security taxes could increase.
Life expectancy today is much longer than when Social Security was enacted in 1935. It makes sense to raise the retirement age gradually.
The details will be tough to work out, and some people will not be happy no matter what. Tomorrow will be upon us soon enough, so our representatives ought to take this on. The President found the money to triple the Border Patrol and ICE budget to $170 Billion over 4 years and is offering $50,000 signing bonuses to new ICE recruits. Some of that money could certainly help shore up Social Security.
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