Jun 21, 2024
Republican Sen. Tommy Tuberville of Alabama has a reputation as a controversial political figure. In particular, his trading practices on the stock market have raised eyebrows — especially given the power and influence his position affords him.
More recently, he took a number of jabs at the nation's crumbling Social Security system — from the taxing of benefits to its dwindling funding.
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Tuberville made this fearless, blustery forecast during a Senate Health, Education, Labor and Pensions Committee hearing in February: "There's going to be about 150 million people coming up here saying, 'Where's our damn money that we paid in? I could have put my Social Security money, 40 years in tax, in [stock] the market and probably be worth $8-to-$10 million today but the federal government wasted it.'"
His remarks may be full of hyperbole. It’s hard to imagine most Americans making $8 million in the stock market with the same amount paid into Social Security, for example. But he’s got a point to make. Social Security is in deep financial trouble.
How Social Security reached the breaking point
With the Social Security tangle, it’s easy to point the finger at federal waste and mismanagement. But the heart of the matter can’t fit on a politician’s bumper sticker. In fact, the problems stretch back decades.
One major issue involves life expectancy. When the Social Security Act of 1935 was passed, the average expectancy in America was 59.9 years for men and 63.9 years for women, per the University of California, Berkeley. Fast forward almost 90 years and people are living longer: 73.5 and 79.3 years for men and women, respectively, according to the Centers for Disease Control and Prevention. That’s more than 20% longer for both sexes, which could not have been predicted when the program was designed.
Another involves rising costs. Even after Congress overhauled the coverage, financing and benefits structure in 1983, the reserves that fund the program are expected to fall short as early as 2035. Taxpayers will continue to pay into the system, but at that point Social Security benefits may not be paid in full.
So, when Tuberville envisions a senior stampede on Washington, he may not be far off.
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The third rail of American politics
Speaking of the nation’s capital, you may wonder why lawmakers have failed to act, knowing that the Social Security clock is ticking but still has roughly a dozen years left on it. The answer is complicated.
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For more than 40 years, Social Security has been called “the third rail of American politics.” That’s because any efforts to fix it threaten to cause so much wrangling and outcry among voters that it’s perceived as safer just to kick the funding can down the road.
Raising taxes could provide a quick and perhaps permanent fix. But aside from conservative lawmakers opposing this, so, too, do seniors — as the very thing that could save the program may well impact their wallets. Senior fellow at the American Enterprise Institute, Andrew G. Biggs, has called it “a game of chicken.”
And while the need for Congress members to roll up their sleeves might seem like an imperative, these days that’s more a sign of political fisticuffs than no-nonsense problem-solving.
Arguably, Congress has never been more divided and dysfunctional. This election year has already seen a number of bills stalled and close calls in terms of government shutting down.
No wonder Tuberville posted to X (formerly known as Twitter) on April 18: “Washington, DC is nothing but organized grabass.”
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Lou Carlozo is a freelance contributor to Moneywise.
