Social Security’s Doomsday Clock

Social Security’s Doomsday Clock is lurching closer to midnight with the news that the program’s trust fund will run out of money by 2032. That’s a year earlier than expected, escalating pressure on policy makers to find a solution. Otherwise, a shortfall in the old-age program’s trust fund will trigger automatic reductions in benefit checks. The ensuing outcry could well remind lawmakers why entitlement programs are called the “third rail” of politics.While Democrats are mooting talk of raising taxes to shore up Social Security, Speaker Mike Johnson appears to be pursuing a more responsible approach. For too long, Mr. Johnson reckons, spending on entitlement programs like Social Security has been rising automatically. These programs, the speaker avers, “have to be adjusted and fixed.” That suggests an opportunity, too, to assess the inflationary impact of this spending.“The reason we are in trouble is because over 74 percent of federal spending is on autopilot, mandatory spending,” Mr. Johnson warns. This tendency is partly the result of what these columns have called a “cognitive dissonance,” courtesy of the Democrats and their allies in the liberal press. Whenever Republicans try to impose any budget discipline on entitlement programs by slowing the rate by which benefit spending increases, the left calls it a “budget cut.”Feature how, in the debate over President Trump’s budget bill, annual Medicaid spending was slated to rise to $741 billion in 2034 versus $677 billion in 2025. The Democrats and the mainstream press howled that this amounted to a budget cut — because the spending wouldn’t rise by more than House Republicans proposed. Yet efforts to frame slowdowns in spending growth as a “cut” go back decades. It’s one reason why entitlement costs have soared.In the years after programs like Social Security were created, after all, members of Congress would debate how much to raise annual payouts. Economic conditions and budgetary constraints were taken into consideration during these debates, which at least to some degree helped to keep a lid on spending growth. This changed in the 1970s, though, in the aftermath of the stagnation sparked by Nixon’s abandonment of the last vestiges of the gold standard.With the dollar’s value plunging, Congress gave up on any attempt to maintain budgetary discipline on entitlement benefits. Instead the solons enacted a budget-busting policy of “future automatic benefit increases” whenever inflation rose by 3 percent or higher. They went a step further in 1986, when Congress removed that 3 percent threshold. So benefits rise in tandem with price increases — while the surging spending itself helps to fuel higher inflation.“Medicare and Medicaid costs, too, rise in inexorable lockstep every year driven by inflation, eligibility, and benefit formulas buried in the fine print of voluminous budget resolutions,” we have lamented, in a reminder that “the debasement of the fiat dollar” has helped spark “the runaway growth in spending.” The automatic spending increases, now legally mandated, are deemed sacrosanct. So any talk of slowing the pace of growth is met with cries of “cuts.”Restoring annual Congressional oversight to entitlement spending increases would be salutary. After all, the Cato Institute found that taxpayers have spent since 1975 an extra $5.6 trillion in entitlement benefits because of flawed calculations overstating inflation’s impact on seniors. Viewed in this lens, Mr. Johnson’s approach to fixing Social Security and other entitlements has more merit than the Democrats’ threats to raise taxes and sowing fear about benefit cuts.

Social Security’s Doomsday Clock

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