Over the course of October and into the election night, the campaign of Donald Trump focused on one thing: change. As we head into December, he seems ready to pivot to the past, at least on the issue of Social Security.
The transition of this troubled program suggests that these core believers are in for four years of brutal disappointment. By the time Trump takes office, the system will have nearly $12 trillion in unfunded obligations to existing voters. It provides an irreplaceable lifeline for millions, many of who expect to be alive and well when the consequences of insolvency arrive.
In response to these disturbing dynamics, surely, President-elect Trump will bring on a business man like Warren Buffett who possesses not only the business acumen but the unquestioned integrity necessary to answer the questions emerging in this vital system.
Get ready to weep. The New York Times reports that Team Trump has named Michael Korbey, a former lobbyist and serial bureaucrat, to lead the transition team for Social Security. He is just one of the Washington insiders who Trump has drained from the swamp to manage the transition to Make America Great Again.
While the man has an impressive resume, it does not draw heavily on actual business experience. Over the last 30 years, Korbey has served in a senior executive role in six federal agencies under every Republican president since Ford. In 2005, he led George W. Bush’s attempt to privatize the system, and currently serves as a senior advisor to the Principal Deputy Commissioner at the Social Security Administration. This isn’t a guy who is personally familiar with the day-to-day struggles of the average American.
Here is the painful fact: if Washington insiders had the answers for this troubled program, it would already be fixed. The selection of a Washington insider to head the transition signals a heavier investment in the status quo, which has served as the incubator for the crisis currently brewing in the system.
What has the status quo accomplished? In 2005, we nominally talked about protecting those 55 and older. Following a decade of status quo, we cannot even protect, under current law, people turning 68 over the next year.
There isn’t much other choice than continuing the past. Over the course of the campaign, Korbey’s new boss seriously narrowed the options for dealing with the financial gaps in Social Security. Trump assured voters that he would not reduce benefit levels for seniors, nor would he consider tax increases necessary to preserve the system. This means it is unlikely that the administration will consider typical policy options such as increasing the amount of wages subject to taxes, or changing the retirement age.
The privatization of Social Security is dead. The math of failure is simple: every dollar that is diverted from Social Security over the next 30 years has to be replaced by a dollar of a different tax. The cost of this concept might reach $30 trillion, a price tag that very few Washington insiders want to explain to voters, much less to President Trump.
Candidate Trump repeatedly said that the key to preserving the benefit structure is job growth. If this statement were correct, the government could expand Social Security to all U.S. jobs, which would increase the number of workers paying FICA taxes by millions. The Social Security Administration says that millions of new workers would extend the solvency of Social Security by a year. It would solve about 6 percent of the near-term financing gap, but would over time leave the system in worse shape as these new workers become new retirees.
The only course of action left is the status quo, which will horrify people who voted for Trump because they voted for a no nonsense business man with visionary change. Instead of a leader, they get the caretaker who has over decades patiently watched the year-by-year erosion of the program.
If we have learned anything from the last 10 years, it is that Washington insiders are the cause of the problem, rather than the solution.
Brenton Smith writes on all aspects of Social Security reform, translating the numbers and jargon of the issue into terms that everyone can understand. His work has appeared in Forbes, MarketWatch, Fox Business, The Hill, and a number of regional newspapers. To read more of his reports — Click Here Now.
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