Social Security faces a funding crisis that will require attention during the upcoming presidential term, according to remarks made by former Treasury Secretary Jack Lew during a media appearance. The program’s primary trust fund is projected to become depleted in the fourth quarter of 2032, at which point only 78% of scheduled benefits would be payable from incoming payroll taxes. If the disability trust fund is included in projections, full benefit payments could continue until the third quarter of 2034, when 83% of scheduled benefits would remain payable.
Lew emphasized that policymakers should not delay addressing the program’s structural challenges, cautioning that reform becomes increasingly difficult as the trust fund depletion date approaches. He suggested that elected officials at all levels should remain flexible in their thinking about potential solutions rather than adopting rigid positions. The former official noted that viable remedies exist but become harder to implement the closer the program gets to its exhaustion point.
Historical precedent exists for bipartisan action on Social Security. Lew pointed to 1983 as an example, when significant reforms were enacted into law under President Ronald Reagan. Those changes included modifications to benefit taxation and adjustments to the retirement age. Lew indicated that policymakers might draw inspiration from this collaborative approach as they consider contemporary solutions.
Regarding specific reform options, Lew expressed skepticism about proposals to invest Social Security funds in equities, citing concerns about government ownership of private enterprises and uncertainty about market performance over relevant time horizons. He suggested instead that lawmakers examine the wage base subject to payroll taxes and whether current contribution levels will sustain the program. Currently, wages up to $184,500 are subject to Social Security payroll taxes. Lew called for an open process that welcomes diverse ideas from policymakers as they work toward solutions.
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