What, exactly, has DOGE found so far in its investigation of Social Security? For the most part we don’t know. But Elon Musk has posted several jaw-dropping items on X that were not what they seemed at first.
Contrary to the programming assumption made by DOGE investigators, for example, the Social Security Administration does not send checks to everyone who qualifies for benefits, is over full retirement age, and is not coded as being dead. This led to the erroneous report that millions of people who are 100 or older – most who would presumably be dead – are receiving checks. The actual number is about 44,000.
This number is plausible since it means that about 1 out of 10,000 Americans is both 100 or older and receives a Social Security benefit check. This comports with a related fact from the Social Security Administration’s data set, which is that those over the age of 100 comprise about .1 percent of those who receive Social Security benefits.
These other budgets, even added up, are too small relative to entitlement budget shortfalls.
In short, some of what looks like news isn’t.
Now, some good news.
Given early mistakes, it is good news that DOGE has no authority beyond having access to data, investigating, and then reporting what it finds to the president. It is the president, or Congress, that will change the Social Security program, not DOGE. Executive orders or acts of Congress will be transparent policy changes. Both the president and Congress understand that unless there is a very good reason to make any change to Social Security, there will be a very high political price to pay.
For those concerned that DOGE investigators will have access to private data, there’s more good news. Social Security data is not secret, it is confidential. It is common for even low-level employees in the federal government to have access to confidential data. Those in DOGE who have such access are special federal employees bound by all the rules binding others who currently work in the Social Security Administration.
Here’s more good news. According to the May 2024 Social Security Trust Fund Report, the unfunded liability for the Social Security Program is 22.6 trillion over the next 75 years. To put this number in perspective, the US GDP for fiscal year ending 2023 was 27.4 trillion. Addressing fraud and waste will shrink the size of this underfunding problem.
It is impossible for the federal government to eliminate the budget deficit by cutting non-entitlement spending, because these other budgets, even added up, are too small relative to entitlement budget shortfalls. For fiscal year ending 2023, for example, mandatory spending (mostly entitlements) was over twice as much as discretionary spending (3.8 trillion versus 1.7 trillion).
This is why researchers like me harp on the need for entitlement reform. But if any significant percentage of the unfunded liability crisis is, itself, rooted in fraud and waste in the entitlement programs themselves, then maybe reforms need not be as drastic as we previously thought.
Now some bad news.
We are very far from being able to reliably estimate the savings to Social Security, so it is premature to think we are out of the woods. The budget hole is very deep: 22.6 trillion dollars over the next 75 years. No serious scholar I know of believes there could possibly be enough fraud and waste to cover the budget shortfalls by only eliminating that. It is therefore imperative that DOGE-related optimism not slow down needed reforms to entitlement. Such reforms are necessary if the federal government is to keep its promises to future generations. The most likely outcome is that it will shrink a very large problem, which is excellent, but the problem that remains will still be large.
In the waning days of the Biden administration, this crisis was worsened by almost 200 billion dollars over the next ten years with the Social Security Fairness Act. In short, an unfair outcome had been detected in 1983, it had been addressed with an alteration to the computation of monthly benefits, and now that alteration has been removed to allow the highest-income people in the program to enjoy the most generous replacement rates which were meant for the lowest-income people in the program. It is very concerning that this incredibly low-hanging fruit has not been seized upon by DOGE. If President Trump leads an effort to repeal Section 3 of this act, it would not constitute his “touching Social Security.” It would not allow a last-minute change to the program that came after the president’s pledge, a change that undermines the program’s ability to keep its promises.
Let’s finish with one last bit of good news. It turns out that two modest reforms that will not reduce what people are expecting to receive from Social Security can close well over 80 percent of the funding gap over the next 75 years.
Even if DOGE is only modestly successful at removing waste and fraud, these two modest reforms could conceivably close the gap completely.
In short, the reforms are to first, no longer use wage growth data to index prior earnings in the computation of average monthly earnings (this is the first step in computing the amount of monthly Social Security checks) and second, to use a chain-weighted CPI index for the adjustment of future benefits payments to more accurately account for inflation.
This would be an incredible gift to the present and future citizens of America.