Unveiling the True Cause of the Social Security Funding Crisis

The chief actuary of the Social Security Administration, Stephen Goss, has identified rising income inequality as the primary cause of the program's funding shortfall. While factors such as declining birthrates and increased life expectancy have contributed, Goss argues that the significant change in income distribution between 1983 and 2000, with fast growth at the top and slow growth elsewhere, has disrupted Social Security's finances. The majority of income growth during that period occurred above the taxable maximum, reducing payroll tax receipts. To address the funding gap after 2034, Goss suggests either cutting benefits by a fourth, raising revenues by a third, or a combination of both. Proposed solutions include raising the maximum earnings subject to the payroll tax or eliminating the cap altogether.