Fixing the Social Security Problem Can't Wait, Says Jack Lew

Question about the Greenspan Commission and whether we are heading toward another Simpson-Bowles-style fiscal commission.

Tom/Scarlett

Jack Lew

The Greenspan Commission was a cover for Reagan-O'Neill negotiations; the 1983 Social Security fix lasted 50 years. The current trustees report shows Social Security will run short in 2032 (22% benefit cut) or 2034 combined. A 20-25% cut is unacceptable for most retirees who rely on it for most income.

Any solution needs long lead time; it should be treated as an issue for today, not 2032. The next president must act before end of first term.

Question: Can the government just print more money to fix Social Security?

Gen X assumes Social Security won't be there; it feels like a Ponzi scheme.

Tom/Scarlett

Jack Lew

Social Security never runs out of money entirely (payroll taxes continue), but falls 22% short. Printing money would worsen the deficit and debt crisis; we already run enormous deficits (spend 23% of GDP, raise 15-17% revenue).

When I was OMB director we had a balanced budget; now we must worry about global support for our borrowing.

Question: What do we do after Trump? What is the behavior pattern of fiscal policy?

Tom/Scarlett

Jack Lew

Social Security is the most pressing test. Neither party is talking about responsible fiscal steps. Start with Social Security to build trust, then address broader fiscal issues. The Trump legacy leaves little resources for urgent needs; debt payments are growing as a % of budget.

We have to start somewhere; bipartisan action is historically better.

Question: What sacrifices would people need to accept to reduce the deficit?

Tom/Scarlett

Jack Lew

We must talk about both taxes and spending. Fixing Social Security (as in 1983) helps overall fiscal health by bringing in more revenue and modestly curtailing spending.

The Bowles-Simpson target was 21% of GDP spending vs 21% revenue.

The rich stopped paying their fair share of Social Security taxes long ago; raising the earnings cap is an easy policy solution that won't hurt the fragile.

I got massive hate mail for showing that chart.

Tom/Scarlett

Jack Lew

It's unfair to say the rich don't pay their fair share; the benefit structure is progressive. But raising the earnings limit is the right thing to do. We should also look at benefit-side adjustments with long lead times, not dramatic cuts.

Poverty programs (Medicaid, SNAP) are much more vulnerable when separated from universal programs. Social Security should keep everyone in it together.

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