Can Social Security be fixed? Four takeaways from Spotlight Tampa Bay event

TAMPA — Around 70 million Americans rely on Social Security, including 5.2 million Floridians.

Launched in 1935, the federal benefits program helped reduced poverty among seniors and some disabled Americans. More significantly, it made retirement a viable option for millions of Americans.

But the program has been paying out more in benefits than it brings in payroll taxes since 2021. It has remained solvent only by dipping into a trust fund Congress set up in the 1980s to handle the anticipated wave of baby boomer generation retirees.

In June,trustees for the program announced that they now project the program could have exhausted that trust fund by 2033, one year earlier than previously predicted. Without an overhaul of the program’s finances, automatic cuts will take effect that year, slashing Social Security benefits by 23%, the trustees report said.

To mark the program’s 90th anniversary Thursday, the latest Spotlight Tampa Bay event hosted in partnership by the Tampa Bay Times and AARP, focused on the embattled benefits program and its future.

The 90-minute discussion was moderated by Graham Brink, Tampa Bay Times viewpoints editor, with the following panel:

• Elisa Walker, AARP government affairs director of Social Security

• Tony Coelho, a retired U.S. Congressman and the principal author of the Americans with Disabilities Act

• Rufus Hawkins II, a financial advisor with Suncoast Investment Services

• Les Rubin, founder and president of Main Street Economics and Rubin Development Corp.

• Edward Longe, director of national strategy for The James Madison Institute

Discussion centered on the future of Social Security, the merits of various proposed solutions and how a divided Congress may struggle to take action. Here are four takeaways from the event:

Social Security or some form of retirement benefits remain vital

While retirement planning has evolved in recent decades with company pensions, 401(k)s and Roth accounts, Social Security payments are still critical for most retirees, Walker said.

For a majority of Social Security recipients, payments from the program make up the majority of their income, she said. For about 14% of recipients, it’s their only income.

The program keeps 22 million Americans out of poverty, including 1.4 million seniors in Florida. It becomes even more vital when spouses die, turning two household incomes into one.

And the income it provides is mostly spent not saved. Spending of those benefits pumps $1.4 trillion into the national economy every year, and over $100 billion in Florida’s.

“For 90 years, Social Security has been the foundation of economic security for retirees, for people with disabilities and for families who’ve lost a breadwinner,” Walker said. “It’s important for lots of different people. It’s also important for our economy.”

The changes made to the program in the 1980s, including measures intended to build up the rainy day trust fund, were intended to keep the program solvent until the 2060s.

But changing demographics, including a sharp decline in the nation’s birth rate in generations that followed the baby boomers, have made the economics of the program challenging.

Around 1950, there were 16.5 workers paying payroll taxes for every Social Security beneficiary. That is now down to an average of 2.7 workers and trending down, Walker said.

Actuaries who manage the program also say growth in income inequality has also played a role in accelerating the crisis since more of the nation’s wealth falls outside of income eligible to be taxed to pay for the benefits program. Social Security taxes are capped at $176,100.

Hawkins, who works as a financial advisor, said his older clients are concerned that the program will run out of money or whether it will even be around when they retire.

“What keeps, I think, my clients up at night is, will they have to return to work? What is the quality of life look like?”

Social Security is not on life support

Despite often reported doomy predictions, Social Security payments will continue even after the trust fund is depleted, Walker said.

The trust fund balance is around $2.7 trillion currently. Workers and their employers pay in a combined 12.4% of their salary every year.

If projections hold true and the trust fund runs out in 2033, the program will continue to pay beneficiaries albeit reduced payments of about 77% of what they are eligible to receive.

“Workers and employers in just about every job are paying into Social Security,” Walker said. “That means that the program will never stop making payments. It will never go broke or cease to exist.”

Less than 1% of money paid into the program is spent on administrative costs, she said. Nonetheless, it underwent reforms pushed by U.S. DOGE Service under Elon Musk resulting in cuts of about 7,000 jobs. The cuts left some regional offices critically understaffed, a June analysis by the Center on Budget and Policy Priorities found.

Coelho, a Democrat who represented congressional districts in California, said the cuts are part of a plan to make Social Security more inefficient and difficult for people to access so there will be less opposition if benefits are cut or the program is privatized.

“If you live three hours away from a regional office, that’s too bad,” Coelho said. “If you’re elderly and you can’t drive, that’s too bad. If you’re trying to make a phone call and you have to wait three hours, that’s your problem.”

Congress will act, just don’t hold your breath

Overhauling Social Security is regarded as something of a third rail in politics, said Longe.

The program is popular with Americans, according to polling conducted by the AARP, with 96% viewing it as important and 75% saying it’s among the most important benefit programs.

And solutions, which may mean either cutting benefits or raising taxes, are likely to prove unpopular.

It’s why the GOP haven’t proposed any major reforms since George W. Bush was president and the Democrat’s Social Security 2100 bill hasn’t advanced at all, Longe said.

The likeliest outcome is that politicians from both parties will only act when the crisis can no longer be ignored in similar vein to how votes on debt ceilings and defense spending are delayed but ultimately approved, he said.

“They kick the can down the road as far as they can, that’s ultimately when they’re going to do what they have to do,” he said.

But panelists agreed that the program will survive its projected fiscal crisis and still exist in 20 years time.

“If history is any guide, we’ll wait to the last minute to fix it, and then we’ll put the band aids on it,” Rubin said.

What are the possible solutions?

There are no easy fixes for Social Security’s looming shortfall, panelists agreed.

Rubin, one of the co-authors of the book, “The Greatest Ponzi Scheme on Earth,” said privatization is the best option for the program. The private sector would produce better growth for the money paid into the program.

People would own and have more agency over how the money is invested. Unspent funds could also be passed onto heirs.

But he said it would be expensive to transition the program and could take over 20 years to achieve.

“We’re so upside down dollar-wise, that once you start doing the conversion, that you have to have some supplemental fees, because you can’t cut the benefits,” Rubin said.

Other solutions include raising the cap so that more taxes are paid into the program. Coehlo said it should be raised to about $400,000.

Raising the retirement age would also be unpopular as would a proposal to means test Social Security and restrict it to those with lower or no retirement incomes. That may encourage higher earners to look for ways not to pay into the system, Longe said.

But Rubin said it may be one of the tough measures needed to keep the program solvent.

“The people that get the most out of Social Security are the ones that need it the least,” he said.

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Find more information about our Spotlight Tampa Bay series, including a video recording of Tuesday’s event, visit our website here.

The next Spotlight event is How AI Can Strengthen Our Communities presented by the Foundation for a Healthy St. Petersburg. It will be held at The Palladium on Wednesday, Sept. 24 from 5-7:30 p.m. The event is free and open to the public. Attendees can register to attend at tampabay.com/spotlight.