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Social Security faces a major fiscal challenge. The program, which has provided retirement, survivor, and disability benefits to millions of Americans since its creation in 1935, is projected to soon cost more than its total income. The budgetary shortfall is already prompting the government to draw down reserves, which will reach unsustainable levels by the early 2030s. As more baby boomers retire, the number of beneficiaries is rising faster than the number of workers contributing payroll taxes. A September report from the Congressional Budget Office warned that, without reforms, benefits may have to be cut by 26 percent.

Although the program’s creators in 1935 envisioned building up reserves, Social Security has been financed largely on a pay-as-you-go basis since Congress enacted changes between 1939 and 1950. The payroll taxes collected from current workers and employers, together with taxes on benefits and interest income, finance the benefits of current retirees.

Social Security faces a major fiscal challenge. The program, which has provided retirement, survivor, and disability benefits to millions of Americans since its creation in 1935, is projected to soon cost more than its total income. The budgetary shortfall is already prompting the government to draw down reserves, which will reach unsustainable levels by the early 2030s. As more baby boomers retire, the number of beneficiaries is rising faster than the number of workers contributing payroll taxes. A September report from the Congressional Budget Office warned that, without reforms, benefits may have to be cut by 26 percent.

Although the program’s creators in 1935 envisioned building up reserves, Social Security has been financed largely on a pay-as-you-go basis since Congress enacted changes between 1939 and 1950. The payroll taxes collected from current workers and employers, together with taxes on benefits and interest income, finance the benefits of current retirees.

What will Congress do? In a hyperpolarized environment on Capitol Hill, with a president who has shown little concern about governing, the prospects for a resolution remain uncertain. The stakes are high. Millions of Americans depend on this program for their retirement income. After paying taxes throughout their time in the labor force, retirees expect the benefits they were promised. Allowing this pillar of the social safety net to collapse would be disastrous for U.S. workers and the broader economy.

In the early 1980s, Congress faced a similar crisis and acted. Although the solution that a bipartisan coalition put into place in 1983 has itself contributed to the challenges policymakers face today, the political approach they took remains instructive. Indeed, it is the only viable path forward. At a critical moment, elected officials from both parties demonstrated that they could forge an agreement necessary to govern.

Congress created Social Security........

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