Retire Better: The debt-ceiling deal hurts Social Security Here’s why.

But you can’t have both. That’s the way it is, and the debt ceiling and spending bill makes all this even worse. Don’t get the connection? Apparently neither do our politicians, who insist that Social Security and Medicare are “off the table.”

As we’ve reported umpteen times, Social Security has been paying out more than it’s taking in for a few years now. The system is bleeding cash so rapidly that come 2035, its vaunted “Trust Fund” is projected to be depleted. What happens then? Social Security payments will be cut 20%. 

This is downright frightening for the tens of millions of citizens who are either heavily—or utterly—dependent on Social Security to scratch out a modest living. Here’s what I mean by “utterly” or “heavily” dependent:  

• Social Security is 30% of all income for retirees

• 37% of men and 42% of women depend on it for at least half their income 

• 12% of men and 15% of women depend on it for 90% or more of their income 

Where do you think this money comes from? Payroll taxes, collected by the IRS. And yet the IRS misses out on—get this—an estimated $470 billion a year, because it doesn’t have the ability to collect everything that the congressionally-mandated tax code says it is allowed to collect. What about enforcement measures? That figure is after enforcement measures. Even worse, the Treasury Department estimates that this gargantuan figure is probably too low. 

That’s too bad. Nearly half-a-trillion bucks a year. That money could help pay our troops, fund cancer research, and a zillion other things—and keep fully funding Social Security well into the future. Instead, we’re barreling ahead toward big cuts in just a few years. 

What does this have to do with the deal to stave off a government default? Republicans insisted that as part of the debt-ceiling deal to stave off a government default, President Biden needed to back down a bit from his pledge to increase funding for the IRS—and thus its ability to collect that badly-needed revenue. 

It doesn’t get much more shortsighted than this, notes MarketWatch’s Brett Arends: 

“The Congressional Budget Office calculated that the extra funding for the IRS would have reduced the deficit, because it would more than pay for itself. But this augmented IRS funding now been cut by an estimated $21 billion out of its budgeted $80 billion over a 10-year span.”

That’s $2.1 billion a year to help collect an estimated $470 billion a year in unpaid taxes. Republicans, it seems, would rather demonize the IRS than take measures to keep Social Security solvent. 

Ever since the Biden-McCarthy deal was cut—the media, with its ridiculous focus on proclaiming “who won” and “who lost,” hasn’t figured out that the long-term loser is likely to be anyone who will one day get Social Security. In other words: you. 

Here’s the part where some folks will say the IRS is already too big. But the IRS, like many government agencies, is creaky, runs on decrepit computer systems and is badly short-staffed (it has lost 50,000 employees over the past five years to attrition, for example). 

You may have heard that President Biden wanted to hire “87,000 new IRS agents.” No, that’s just sloppy partisan hacks on TV telling folks what they want to hear. Actually, what the administration had proposed was to hire about 87,000 employees (over a decade), including tens of thousands of customer service representatives to answer phones faster, upgrade and maintain computer systems, file mail, data entry and the like. The workload has only increased in recent years, given that the U.S. population has grown—while the IRS’s budget, in inflation-adjusted terms, has shrunk some 15% in recent years. 

So, sure, if you want to feel good that the IRS isn’t getting the full budget boost it wants, be my guest. Just understand that the one who may pay a price down the road could be you.