Congress must find new Social Security funding, a persistent problem.
Both presidents Carter and Reagan, in the 1970s and 1980s, respectively, signed Social Security reform packages that called for higher taxes and benefit cuts.
Carter said his package would make the system “sound.” Reagan said changes would “protect the financial integrity of Social Security.”
Neither happened.
The issue for this pay-as-you-go system is how much should the government tax one generation to pay for the benefits of another?
Hillary Clinton, in defending the program, said, “When Franklin Roosevelt proposed Social Security, he didn’t go out selling it with actuarial tables.”
Correct.
Indeed, Henry Morgenthau, FDR’s Treasury Secretary in 1935, warned Social Security founders weren’t considering future taxpayers. Would they always be willing to pay higher and higher taxes?
Morgenthau had doubts.
“They would place all confidence in the taxing power of the future to meet the needs as they arise,” Morgenthau wrote. “We do not share this view.”