Column: Social Security doomsayers are wrong again, but reform choices loom

Social Security will soon be insolvent! Insolvency is coming years earlier than we thought! Benefit cuts are a real possibility!

Last year, the dramatic fall in employment and earnings in the second quarter of 2020 did translate into lower Federal Insurance Contributions Act revenue paid into the system by workers and employers - temporarily. And the pandemic did worsen the financial health of Social Security, but just a bit. The trustees project that the reserves of the combined Social Security retirement and disability trust funds will be depleted in 2034 - one year earlier than predicted a year ago.

Congress has known about these problems since the early 1990s. But the situation has been a stalemate because there has been no consensus about how to address the problem, especially with the rising political polarization of the last decade. Conservatives have pushed for a higher full-retirement age - which effectively cuts benefits by raising the bar for attaining your full benefit - while progressives developed a consensus over the past decade around new revenue and expansion.

Lawmakers might just kick the can down the road until 2034 draws nearer - and if that happens, the odds are good there will be no benefit cuts at all. It is unlikely that Congress would impose benefit cuts at that point retroactively to current beneficiaries, and that means that significant cuts could be applied only to future beneficiaries. In that scenario, it would be difficult to avoid insolvency by relying on benefit cuts.

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