The Social Security Administration runs the Old-Age, Survivors, and Disability Insurance program, which is the largest federal program. It also runs the Supplemental Security Income program. These programs are growing rapidly and are financially unsustainable without major restructuring. Reforms should aim to promote greater reliance on personal savings for funding periods of disability and retirement.
The Social Security Administration will spend $990 billion in 2015, which is about $7,920 for every household in the nation. After adjusting for inflation, spending has increased 59 percent since 2000.
- Social Security Retirement. Social Security faces a huge financing gap because of its pay-as-you-go structure and the aging of the U.S. population. It should be transitioned to a system of personal savings accounts, which would increase individual financial security and help to avert future tax increases.
- Social Security Disability Insurance. Growing numbers of Americans are receiving disability benefits, and the system is subject to major abuses. Policymakers should tighten eligibility for the program and explore ways to move it to the private sector.
- Supplemental Security Income. This program for low-income and disabled individuals suffers from similar abuses and overspending problems as Social Security Disability Insurance. The financing and administration of Supplemental Security Income should be devolved to the states.
- Milton Friedman on Social Security, Hoover Digest, April 30, 1999.