WASHINGTON — Ninety years ago this Thursday, President Franklin D. Roosevelt signed the Social Security Act into law, creating a promise that American workers could count on a measure of dignity and financial security in old age. But changing demographics, decades of political neglect, and recent policy missteps have put that promise in jeopardy, with 24% benefit cuts automatically taking effect before the end of the next president’s term if Congress fails to act.
To mark this anniversary and confront the crisis head-on, the Progressive Policy Institute (PPI) today released “Reform That Rewards Work: A New Vision for Strengthening Social Security’s Intergenerational Compact,” a sweeping proposal to rescue the nation’s most important retirement program while making it fairer, more sustainable, and more pro-work.
Authored by Ben Ritz, PPI’s Vice President of Policy Development, and Nate Morris, Fiscal Policy Fellow at PPI’s Center for Funding America’s Future, the plan would restructure Social Security’s benefit formula, modernize eligibility rules, and raise revenue with a more progressive, growth-friendly revenue system. The proposal’s key features include:
New “Work Credit” Benefit Formula: Calculate benefits based on years worked, not lifetime earnings, ensuring a low-income worker and their higher-earning boss receive the same benefit for the same number of working years.
Targeted Retirement Age Adjustments: Gradually increase the early and maximum benefit ages to reflect longer lifespans, with safeguards for lower-income and long-career workers.
Better Cost-of-Living Adjustments: Change COLAs so they no longer overstate inflation, paired with a “longevity bump” for the oldest retirees most at risk of outliving savings.
Fairer Spousal and Survivor Benefits: Strengthen protections for widows and widowers while capping excessive subsidies to high-income couples.
Generationally Fair Financing: Use a mix of progressive income tax reforms and consumption taxes to spread costs more evenly across generations, rather than using regressive payroll tax increases to make working Americans foot the whole bill for fixing a problem created by previous generations.
“Many Social Security proposals cling to the current system but break the historically important link between contributions and benefits,” said Ritz. “Our plan is unique in that it actually strengthens Social Security’s premise as a benefit people earn through work, all while improving fiscal sustainability and reducing poverty.”
According to independent modeling, the plan would close Social Security’s shortfall through a roughly even mix of benefit reforms and tax changes. Top earners would see modest benefit reductions roughly on par with those already projected to occur under current law, but many low-income and long-career workers would receive higher benefits, leading to substantial poverty reductions for older Americans.
“Any serious plan to save Social Security will involve tough tradeoffs,” said Morris. “What makes ours different is that it balances the books without balancing them on the backs of working Americans. This is the kind of radically pragmatic reform Washington needs.”
Read and download the report here.
Launched in 2018, the Progressive Policy Institute’s Center for Funding America’s Future works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. To that end, the Center develops fiscally responsible policy proposals to strengthen public investments in the foundation of our economy, modernize health and retirement programs to reflect an aging society, transform our tax code to reward work over wealth, and put the national debt on a downward trajectory.
Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Find an expert and learn more about PPI by visiting progressivepolicy.org. Follow us @PPI.
###
Media Contact: Ian O’Keefe – iokeefe@ppionline.org
