But not all policymakers are ignoring the drivers of debt. The House Ways and Means Committee held a hearing this week on the Social Security 2100 Act. Having held four subcommittee hearings on the subject, John Larson and Tom Reed deserve applause for calling attention to the real dangers of allowing Social Security to continue to careen off its fiscal course. However, the Social Security 2100 Act does little to correct the destabilizing forces at play within our mandatory spending challenges.
In fact, the bill exacerbates those challenges by expanding benefits for beneficiaries while socking the next generation with all the costs. While demographic changes have placed increasing and foreseeable pressures on Social Security, the solutions for this slow moving catastrophe always seem to be the same proposal of shifting the cost to future generations.
This is precisely what the Social Security 2100 Act would do. While it laudably transforms Social Security into a solvent program, the price of doing so would be less mobility for young workers today because the legislation would raise the payroll tax from 12.4 percent to 14.8 percent. So as Andrew Biggs of the American Enterprise Institute points out, this increases the lifetime taxes paid by low and middle income earners by a fifth, without a guaranteed commensurate increase in the actual benefits.
As I remarked in testimony I gave on the bill, this results in workers at the beginning of their careers shouldering the larger share of the burden. This year marks the first year in which millennials overtake baby boomers at the largest living generation in the country. Workers in this generation are more likely to start or run a business than those in previous generations, and would be particularly disadvantaged by an increase in the payroll tax.