Andrew Biggs, senior fellow at the American Enterprise Institute

American Institute of Enterprise

When Andrew Biggs, a senior fellow at the American Enterprise Institute, was nominated by President Joe Biden to serve on the Social Security Advisory Council in May, he came to an important inflection point for the program.

A subsequent report by the program’s administrators in June predicted that its combined trust funds could only pay full benefits until 2035, when 80% of benefits will be payable. Although it’s a year later than expected in 2021, it still sets a deadline by which Congress must act to make changes to a program that about 70 million recipients rely on for their income.

The Social Security Advisory Board has no direct role in finding fixes for this problem. But after decades of Social Security research, Biggs has established himself as an opinionated voice on the program.

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CNBC.com caught up with Biggs about what he thinks should be done to fix Social Security and what he hopes to accomplish in his role on the Social Security Advisory Board that is up for Senate confirmation.

(Editor’s note: This interview has been condensed and edited for clarity.)

JJ Gouin | Istock | Getty Images

“Big reforms… tend to be bipartisan”

Lorie Konish: You were named a member of the Social Security Advisory Council by President Joe Biden. You recently wrote that it is the “greatest obstacle” to the expansion of Social Security. Why?

Andrew Biggs: The article I wrote actually argued that President Biden’s stance of not raising taxes on low-income people is pushing Democrats and Republicans toward a compromise on Social Security, than existing plans to expand Social Security. significantly rely on raising taxes on Americans earning less than $400,000. , which is contrary to the President’s position. So if the chair has said he’s not in favor of that approach, that pushes for a more compromised position, which I would favor.

(Reporter’s Note: Social Security Act 2100: A Sacred Trust Proposed by Rep. John Larson, D-Conn., Calls to Reapply Payroll Tax and $400,000 in Wages, Per Biden’s Pledge. However, the exclusion of increases in the payroll tax rate limits the length of time that the solvency of the program can be extended, Biggs supports.)

LK: Democrats are strongly opposed to benefit cuts. Republicans are against tax increases. Do you think they can meet somewhere in the middle?

A B: The political reality is that on really any major piece of legislation, but especially rights reform like Social Security, it is impossible for a political party to pass its own plans without any support from the other side. Our system requires it to pass the House, then have a supermajority in the Senate, and then have the President sign off. It is highly unusual for a single political party to hold all of these keys to power. Thus, in the United States, major reforms like the 1983 Social Security reforms tend to be bipartisan. I think ultimately that’s the way things are going to have to be.

“You have to build from the center”

LK: Do you think reform efforts will progress under Biden?

A B: It’s really hard to say. There’s still talk among the sponsors of Social Security Bill 2100, which is the largest or most significant Social Security expansion plan in the House, that they want to get it through committee and get him to vote. And yet, it really has no chance of becoming law. I think just like the Republicans tried to put in place their own social security plan in 2005 under President Bush without any Democratic support, and they failed, I think ultimately the Democrats would realize that they would be in the same position.

If you want to solve the problem, you really have to start from the center outwards, rather than starting from an extreme left or right position. And that does not mean that these positions are extreme positions, that they are wrong from a technical point of view. It just means that in our system, to make a big change to an important program, you have to build from the center. It’s just the reality of how our system works.

LK: Do you have any idea of ​​President Biden’s position on Social Security reform?

A B: No. I haven’t had any discussions with them about it. The Social Security Advisory Board, to which I was appointed by the president, does not in any way give advice on things like how to fix Social Security. It really deals with more technical issues of how the Social Security administration runs the program, how the system is administered, technical issues along those lines. This is not an advisory committee on how you fix Social Security through reform.

The goal is to make the program “work better for people”

LK: What do you hope to accomplish in this position?

A B: I think the advisory board has done a lot of useful work over time. If you’re in the social security world, you follow what they do. I’ve done some work in the past at their request, looking at how you analyze the program. What strikes me about the advisory board side is that every four years they appoint a technical group that reviews the projections of the social security program to see if we are accurately projecting fertility and mortality and all the things that affect the finances of the system, but they’ve also looked at things like how we administer the disability program to make sure people can file their claims quickly and accurately.

So I’m not going into this with an agenda of what I think the board could do, but to come in and work with other board members, who are people from both political parties, and just try to continue the good work that has already been done.

LK: Sometimes there’s a perception out there that people have an agenda, whether the position is suitable for it or not.

A B: On something like that, what I would suggest people do is look at the people who sit on the Social Security Advisory Council. You have Democrats and Republicans who have strong differing opinions on how Social Security should be set. But then look at the actual work that’s being done at the Social Security Advisory Board, and it really has nothing to do with those policy differences.

It’s really about making the program and the system work better for people. This way, professionals can separate their views on how we fix Social Security from their technical expertise on how we can make this program work better on a day-to-day basis. So these are just separate issues.

A Social Security Administration office in San Francisco.

Getty Images

Any reform “will be a compromise”

LK: What changes would you like to see made to Social Security to address this?

A B: I would like to point out that my opinions on Social Security reform and how you fix the solvency of the program have literally nothing to do with what I would do on the Social Security Advisory Board. My view on Social Security – I write about it often – I tend to believe that the program should focus its benefits on those who need it most, adopting a real guarantee against poverty in old age, what the current benefit formula does not do. t.

But I also believe that over time, people with middle and high incomes should gradually save more for their retirement and rely a little less on benefits from the program. I would tend to favor longer-term adjustments to benefit growth rather than dramatic tax increases. At the same time, I understand that any social security reform that may be passed, that may be enacted, will be a compromise. There is a distinction between saying what your personal political preferences are and understanding the kinds of compromises that need to be made to fix this important program.

LK: What prompted you to devote so much of your career to social security?

A B: I guess you can think of it two ways. On the one hand, social security is an extremely important program. It is the largest federal spending program. It is the biggest tax most Americans pay, more than income tax. It’s the biggest source of income for most retired Americans. It is also expected to be insolvent within ten years. From a strategic point of view, this is an extremely important question.

From a personal perspective, as a policy scholar, it’s just an incredibly interesting subject to work on. You touch on whole areas of economic policy, from people’s individual retirement savings to how they are affected by taxes, how they decide when to retire, how much retirement income . Just like an individual researcher, this is a fascinating area to work on. Starting to work on Social Security about 25 years ago was just one of the best business decisions I’ve ever made.