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A Simple (Sorta) Social Security Solvency Fix

Government Affairs

We thought it was a sign of bipartisan hope in an increasingly divided Congress. Recently, President Biden nominated Andrew Biggs, a Senior Fellow at the American Enterprise Institute known for his contrarian retirement takes and criticism of financial media sensationalism, to the Social Security Advisory Board.

Biggs, a former principal deputy commissioner of the Social Security Administration, played a part in President George W. Bush’s efforts to “strengthen” (some would say privatize) the popular government program.

The optimism faded when Biggs explained the process.

“A lot of federal boards have to be bipartisan, and the Social Security Advisory Board is one of them, which means that a certain number of the nominees has to be Republican, and a certain number has to be Democrat,” Biggs said. “That leaves independence out twisting in the wind. But, you know, that’s an issue for another day.”

Considered a retirement policy expert, Biggs produces research and papers for AEI, the conservative think tank that counts former Vice President Dick Cheney and former Education Secretary Betsy DeVos as members. He routinely publishes pieces in national news outlets, with his idea for a Social Security fix appearing in The Wall Street Journal.

Still, it’s a bold Biden move.  

“The president had to appoint a Republican, and I’m that Republican,” he added. “It doesn’t mean I would necessarily be his first choice. I would be the first choice of members of the party that he doesn’t belong to. He does it in consultation with Republican leadership and Senator McConnell to work through names. Some on the left get upset at the President nominating this awful Republican. The reality is the law requires it.”

Regardless of his politics, his Social Security experience lends expertise to the board at a critical time for the Social Security Administration, and the program, which he emphasized are two different things.  

“It’s not a partisan job in the sense that you don’t go out and push your agenda. If you look at what the advisory board does, it doesn’t do anything like what people are afraid I might do.”

Cap it

What they’re “afraid he might do” is detailed in his Journal piece, which is to cap the maximum benefit the Social Security pays. The maximum benefit for someone retiring today is a little over $42,000 per year, which Biggs noted is three times the poverty line and two to three times the maximum benefit paid when compared with the UK, Canada, Australia, and New Zealand.

“The way the Social Security benefit formula works is that the maximum benefit can increase every year, so more and more people in the future will be getting more than $42,000 per year,” he said. “My idea is simply to cap it. Just say, ‘Look, we’re not going to do anything else up to $42,000 [linked to inflation], but in future years, $42,000 is all you’re going to get.’ It seems like a not unreasonable idea. It won’t fix the whole problem, but maybe 25% of the problem, something like that.”

He developed it from looking at his own finances and realizing that when he and his wife retired, they’ll receive as much as $70,000 from the program alone.

“In real dollar terms, $42,000 grand is more than enough. Maybe it’s gimmicky, or it’s too simple. Still, it’s just saying that given that high-income Americans are saving more for retirement than ever and their incomes are higher in retirement than ever, then $42,000 is enough.”