Social Security, the Trust Fund as they call it, is going to be belly up by twenty thirty three, and that could mean benefit cuts for everyone, even current retirees. But is it really Because I got to tell you, guys, I have heard in my lifetime over and over and over again this same story.
So let's go to somebody.
Who has what has to be the most frustrating job in the entire world. Mike Murphy works for the Center for the Responsible Federal Budget, which obviously we don't have, but he is here to talk about Social Security and what that really really looks like.
Mike, Welcome to the show. First of all, thank.
You, Mandy. Great to be with you. Thanks thanks for having me.
Is your job trying to create a responsible federal budget? Is it just like walking up and just slamming your head against the desk every single day watching what's happening in Washington, DC?
Yeah, pretty much. At the Committee for Responsible Federal Budget, Yes, we advocate for fiscal responsibility, Amandy Goilso do it in a non partisan, bipartisan way, so we're trying to work with both parties, which is also tough, okay these days to try to work on both sides. Of the aisle, but sorely needed, and that, yeah, it is. It was a little bit of pushing a boulder up the hill, to say the least.
I would say that I have been so incredibly disappointed by the lack of seriousness demonstrated in Washington, DC when it comes to spending on either side of the aisle. With the exception of Thomas Massey, who is as principled about spending as any human being is ever going to get, there doesn't seem to be any measure of seriousness in DC about cutting spending because they simply refuse to acknowledge the impact that it has on the overall economy in
my view. But now we've got social security. This is a sacred cow. This is the third rail of politics. And once again we're being told that in twenty thirty three the trust fund will be insolvent, which means that they will only be able to pay seventy seven percent of benefits.
For all retirees.
And I say that because a lot of times before we been told, well, these cuts will be in the future, this will. But now the future is now according to this, what's the reality of this, Mike.
The future is now just to put one point on that too. It's it's clear to me that next year at the election box is arguably the first time, but people are going to be voting for people on the federal ballot that will be in office when this insolvency
date is right up against it. Because if you think a six year Senate terms, so this this windows here now because you're right, man, he because it has been talked about for a while, it's always been in the early twenty thirties, but it's common now and then we need to get on it. So so the issue here is social Security. You know, stepping back, it's a vitally important federal program. I just seventy million people about on Social Security. There's going to be more by the time,
you know, twenty thirty three rolls around. Over forty percent of people rely on for a majority of their income. So it's not it is the third rail of American politics. But it also is a vitally important program. And then when we reach that point, by law, they are required when it goes insolved, to match what the schedule benefits are, what the revenues that are coming in. And you said
it already. When that happens, it would have to be in a twenty three percent across the board cut that is estimated to be about equating to about seventeen thousand dollars for the average middle income couple on consol security.
To put that in context, that is a big chunk out of a relatively I mean, here's the thing. The forty percent of Americans that are living on Social Security, they're.
Not living high on the hog.
These are people who are probably living very modestly already, who are probably already very budget conscious already. At a seventeen thousand dollars hit would be devastating.
It would be truly devastating. And it's even more so why you mentioned how you know that you're discouraged, I guess is a light way of saying about the lack of attention truly on fiscal challenges. Obviously we are too. But the one that really gets me it relates to this is this is kind of a bipartisan agreement now to talk about how we're not talking about social security, we're not touching social security. That is now the campaign
talking point on both sides of the aisle. And the reality is when someone says that they're not going to touch Social Security're not going to talk about Social Security and continues that stance. They're guaranteeing that twenty three percent across the board cut. It's going to happen by law, and it's better to solve it sooner rather than later for all sorts of reasons. You can spread, spread the
changes out, you can phase it in. There's logical reasons to do things sooner rather than later and not wait to the deadline, which is what Washington always does.
I have a very smart listener.
His name is Joe, and he sent me this earlier, and he says, the simplest and farest solution is the same one that's been used six other times in the past ninety years. Raise the payroll contribution rate. The current Fyker contribution rate is seven point sixty five percent for the employee and the same amount from the employer. Of that point two percent goes into Social Security and one
point four to five percent goes into Medicare. Increasing the contribution rate zero point five percent each moves the program from its current annual cash deficit position into an annual cash flow positive position and begins to rebuild the trust fund.
How accurate is that and is it possible.
The number sound accurate, and it's certainly possible. The solution to Social security. People have been looking at soci security for years in the kind of public policy world, okay in DC, and the levers that you can change on social Security actually pretty well known. And you have to
look at the both sides of the equation. It's on the revenue side that comes into the program, and can you adjust benefits that are going out and on the revenue side, so you touched on what the gentleman's recommending is sort of adjusting the rates of taxes. Another very common proposal. I was actually just at a couple of speaking events in Colorado yesterday talking about this, and three times this idea came up, which is not necessarily adjusting
the rate. But any people realize that you stop paying Social Security tax contributions when you reach a certain income, right so it'd right throughout one hundred and seventy thousand dollars above that you don't pay any payroll tax right now, you don't get benefits either, and as a social insurance program, so it's designed that way, but they haven't adjusted that level to account for total wages and years, and you
can easily adjust that cap. That's actually a much more popular and it actually polls well on both sides of the aisle to adjust that cap. So I think on the revenue side, that's a more likely scenario than maybe adjusting the rates. But then there are things you can do on the benefit side as well.
Do you eliminate the cap entirely, because that seems like the most practical way to just say, look, if we're going to do this, let's do it all in one fell swoop instead of piece mealing it and saying we're going to raise it to three hundred thousand or whatever
it is. I mean, that seems to me to be the most practical way if you're going to do it, And frankly, that would be preferable than some of the other asenine proposals that I've seen, things like, you know, if you are above everybody at the same level, So basically, if you have made more money in your career and you've paid in at a much higher level, you're going
to get the same benefits as someone who didn't. And and that offends me that that that irritates the crap out of me, because it's just a wealth redistribution scheme at that point, and I'm very uncomfortable with that notion. So I'd rather pay more in on the front side and leave that sort of you know, if you pay more, you get more the way it is.
Yeah, I think there's a there's there's several considerations, and look, that could ultimately be part of the solution. We wet the committee first, put a bunchet, don't advocate this is your exact solution. There's lots of ways to do this. That could be one, but there's some considerations to be had there. So one you already I think mentioned before.
So if you let's say you lift that cap and that the name that always says you're listening to the caps, say warm Buffet's going to be paying it up to his full income, right right? Well are you paying benefits to Warren Buffett up to that full income too? Right?
Because those are the considerations you have to have, and that that obviously changed the equation and the other factors you have to have thought there are Well someone might say, well, no, you shouldn't do that, but then also you've got to be cognizant of then it's somewhat changes the nature of the program. There's always been somewhat sort of as a fairness issue of like there's something related to the contributions, related to what benefits really to what you pay in.
So if you start messing with that doesn't infect the political viability of the program in different ways. So the other thing you have to think about is what's the other dollar potential purpose for that same tax revenue, because a lot of people have ideas right of different programs, new programs, ways we want to spend money on different things, and if we're going to try to pay for them,
potentially more revenue. A lot of times people try to put that revenue on the wealthier side of the tax base. And if you're doing it for this and also want to do it for something else, you got to take that into accounts. So those are just other considerations, Mandy. But I think different ways to adjust that cap are certainly going to be part of the discussion when politicians get around to this.
And that's the sad part because the longer they wait, the more this is going, the bigger this adjustment is going to have to be. And my frustration is is that we have now normalized allowing Congress to create an emergency, and then they last minute, at midnight run in with some crap plan to fix the emergency that they created because they didn't act on it earlier. And then we're all supposed to be grateful that they came up with a garbage solution because they did it at the last minute.
And I'm like, this is too big an issue to just continue to kick the can down the road. Is there any real movement? Are there enough members of Congress? Are there enough members of the Senate that are concerned about this that anything could happen feasibly in the next couple of years instead of waiting till twenty thirty two for the last minute garbage solution that will inevitably be horrible.
Yeah, there are some. I can tell you that there are certainly many actually that understand the problem. They know what's coming. It is the quintessential third rail. That's why if you do step out and offer specific solutions. But I I'm I'm going to try to be an ey optimist that I tend to be an optimist that some of the things we were already talking about gives me a hope it's going to start to be on the table. When you start seeing this within the election windows of people.
I think that can start to make it an issue when you know, the next presidential election, which will be here frankly before you know it's that's going to be in bad term. So thinking about how to raise this in the context of campaigns and make sure when it's talked about in campaigns that can make it be more of an issue because right now it's not being talked
about during campaigns and we need to. And that's why I talking to folks like yourself and your listeners who want to press their polutmakers and candidates to how will you save Social Security? Don't tell me we're not touching it, because not touching it leads to that cut.
Well, here's the thing.
The thing is this. The thing is I've already solved that problem because I am a genius. I don't know if you know this. I'm a mastermind of everything. I'm kidding, but I have given this a lot of thought and how to make this a campaign issue. In this article last week actually solidified this for me. So if I am a Republican who is serious about cutting US or fixing Social Security, or if I'm a Democrat serious about
fixing social Security. My accusation of my opponent is he wants to cut your social security twenty three percent, because that's what inaction does, and that is the campaign slogan that I go with. The opponent wants to cut your social security twenty three percent, We've got to fix it, We've got to figure it out, and that person is
unseerious and wants your benefits to be cut. Now, it's a scare tactic, one hundred percent, but since the creation of social security, it's been used as a scare tactic in campaign.
So I'm just leaning in on it.
But I think until we get people that are serious about this and recognize that doing nothing is a twenty three percent cut, we're gonna end up with this.
And I will say this, Mike, I'm gen X.
When I read this article last week, I was like, of course gen X is getting ready to retire.
Of course social security is going broke. Of course it happens to this generation.
So you know, millennials, I think, really believe social security isn't going to be there.
I know I believe it.
When I was younger, I wish i'd plan more for retirement. I'm playing catch up. Now, but I don't know what to do to unscare or maybe scare them in the right direction, especially people who are already getting benefits, because I've had a few people text me today and say, well, this is just for people going forward, right, They're not going to cut my benefits, but it is going to cut everyone's benefits right.
By law required across the board, everybody on the program.
And so I think, look, I think your tactic is exactly a lot right, easy for me to say, right, because I completely agree with that, where we just have to be warning people that this is what's coming as a result of people not, you know, putting forward a solution if they're going to attack somebody else, you not putting forward a solution as leading to that twenty three percent cut, I completely agree with that, and I think that you know, what we really need to do is
have it. It's going to have to come from voters, because voters. Actually, this is kind of when you're folks like ourselves who we talk about this all the time, we always actually find it surprising because we say it all the time and it's in the news a decent amount, but people still don't know that that date's coming. I said it multiple times in some of these events this day, and I had several people go, wait, that's in twenty thirty three. That's actually not that far away. Yeah, and
so people actually don't know what's coming. So we really need to get out there and tell the truth about the state of Social Security during the campaigns, going out to voters, making sure they're aware so they then can convey that same message maybe that you just said.
Let me put this in the context of a bigger conversation about the federal budget itself. Here's my problem, right, Okay, so raise the cap, take more of my money. I don't trust the federal government to just keep it for social Security because we already know how that.
Song and dance sense. I mean, that's my problem.
Is there anything that, in the course of reforming what we've got now, we could create or rather remove the ability of the federal government to pilt for the Social Security funds?
Yeah? I think I think that should be part of the discussion going forward, to think about how you're putting some guardrails around this. But the broader point there is that they just have to get the whole fiscal house
in order. Okay, because what's been going on is, which I think is what you're alluding to, is that, yes, like the social security quote unquote surplus that was there, what's been going on is they actually just use a lot of that revenue that's coming in to kind of, you know, make the deficit frankly appear less than it otherwise would have been. Okay, but it's still huge, and so it's just a matter of if we got to
get the overall deficit under control. That goes back to your original point, Mandy, of what's been going on in Washington. People talk a big game on the deficit and spending, and then when they get to governing and they have the opportunity to do so, they don't get a time. And that's actually is what we're seeing right now with
the big beautiful billets moving forward. That's concerned that that will inc increase the deficit based on the way it's structured right now, because they're not cutting enough spending to all set the spending increases in the taxes. So that's the issue is, yes, they should try to figure out to put some guardrails, but the broader point is they need to get more responsible at the entire federal budget right as part of the conversation.
You appreciate it with the choir on that. I really appreciate your time, Mike. I wish that you know some of the ideas that are floating around there. I think are way better than others. But I hope that we can inspire the conversation and maybe, as I said, those politicians need to run on they're in action, And somebody rightfully texted this, they said, but the candidate must present
a plan, not just run on the mantra. But I think if you came out as a candidate and said, look, we have multiple options, and here are the options that I like best, but I'm open to a bigger conversation about fixing this issue, I think then you can at least begin to have the conversation and get people who
are serious about fixing the problem in office. Because I do believe that laying it out in those stark terms would motivate older people who are already getting benefits, who are absolutely going to vote, to really think about that. The solvency of their own pocketbooks may be the thing that makes this happen. Mike murphylic you have the last word from the committee for the responsible federal government.
Well, I just agree. I agree with everything you just said about the fact that people, when they're talking about in the campaign, actually I think it, frankly is better that you're actually putting out there. You don't have to put out your specific solution. This is exactly how I'm
going to say. But that would be nice, not be preferable, but frankly, the political reality is that that actually might hurt people to basically, like, all of a sudden, you're kind of honing in on that one thing, and people are going to attack that. When there's a range of frankly common sense options, we have them on our website. People can go and check that out at CERFB dot org. We have a tool it's called the Reformer that you can go on there and basically fix all scared of yourself.
It shows a lot of these options. So I think that's a great approach, and I just thank you Mandy for caring about this issue and drawing attention to it. I just hope for for folks that are concerned about it to get more involved, impress their representatives to make this an issue that they're going to solve.
Mike Murphy, I appreciate your time today, and we'll keep preaching the same message.
Thank you, Mandie, thank you for having me