As a case study in the workings of modern democracy, the handling of Social Security by successive U.S. presidents and Congress over recent decades is a deeply disturbing exercise. The facts are not in dispute. Congress and the White House have agreed to benefits for retirees and the disabled that are woefully underfunded. Rather than bring the programs into balance — with some combination of benefit cuts and tax increases — the bipartisan consensus is either to do nothing or to raise benefits.
The amounts are hardly trivial. According to the latest projections by Social Security's actuaries, the uncovered gap between the program's costs and revenues comes to $13.9 trillion over the next 75 years, or 2.78 percent of covered wages. The share of covered payroll may not sound daunting, but it would come atop the existing payroll tax of 12.4 percent. If the gap were entirely filled by taxes, the total tax would be roughly 15 percent of payroll.
Something must give, because under present law, the Social Security trust funds can pay benefits only from their dedicated taxes and the trust funds' accumulated interest. By the actuaries' estimates, the trust funds would be exhausted by 2035. To bring the trust funds back to balance would require some combination of the 20 percent tax increase or a benefit cut — unless the law is changed to allow for other revenues to be spent on Social Security.