Episode 916: Social Security Insecurity in 2032

Summary

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Newt’s World – Episode 916: Social Security Insecurity in 2032

Host: Newt Gingrich
Guest: Andrew Biggs, Senior Fellow at the American Enterprise Institute
Date: November 30, 2025

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Episode Overview

In this episode, Newt Gingrich discusses the looming Social Security crisis with Andrew Biggs, a leading expert on Social Security reform. The conversation covers misconceptions around a “retirement crisis,” why the system’s true issues are often misrepresented, international comparisons, and the tough political realities of reforming Social Security before projected insolvency in 2032.

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Key Discussion Points & Insights

1. Why Social Security Matters & Andrew Biggs’ Background

• Biggs describes Social Security as a uniquely fascinating policy area that touches almost every aspect of citizens' lives and government function.

  “Social Security is so large, it covers every area of government, every part of people's lives. ... It's just been a fascinating issue to work on throughout my career.” – Andrew Biggs (04:54)

2. How Perceptions About Retirement Have Changed

• Early in his career, Biggs believed the U.S. had a retirement savings crisis, a view he’s since nuanced due to deeper research.
• Americans are actually saving at record levels, and senior poverty is at historic lows.

  “Later on…you discover Americans and the US Retirement system are really doing very well. That plays into how you think about Social Security reform. If Americans weren't saving for retirement on their own, then any cuts to Social Security I think would be hard to justify. But when Americans retirement savings are at record levels and poverty and old age is at record lows, you could start thinking about things a little bit differently.” – Andrew Biggs (06:24)

3. The Myth of a “Retirement Crisis”

• Surveys show most Americans believe there’s a retirement crisis, but only about 4% of retirees themselves feel in crisis.

  “It's a retirement crisis for thee, but not for me. There's a huge split in how Americans view the whole retirement system versus how they view their own retirement savings.” – Andrew Biggs (07:24)

• Biggs points out that public anxiety is driven by financial industry messaging, media incentives, and political philosophies—often at odds with actual data.

  “Nobody has the incentive to tell Americans the truth, which is that our retirement system is working pretty well...it really is surprising that people who know better will still use the scare language to try to motivate people.” – Andrew Biggs (09:15)

4. How We Talk About Social Security Reform

• Biggs criticizes the focus on “solvency” at the expense of structural modernization:

  “What are the chances that a program that was devised in 1935 ... is the right structure for a program for 2035 and beyond?” – Andrew Biggs (11:50)

• He argues for a “blank slate” approach, reimagining the system for today's realities where elderly poverty is rare and personal savings are robust.

5. The Challenge of Political Reform

• Any meaningful reform faces powerful lobbying from groups like AARP.

  “In literally anything you do on this, you are going to be open to attack. You know, even if you cut benefits by a penny for the highest income retiree, AARP is going to say something. ...they are the union for old people.” – Andrew Biggs (13:52)

• Biggs stresses the importance of communicating reforms “in English,” not actuarial jargon, to build public understanding and support.

  “Often discussions about Social Security are just in this actuarial mumbo jumbo… It doesn't mean we lie to people, it means you convert it to English to terms they can understand.” (15:26)

6. Impending Crisis: What Happens If We Do Nothing?

• The Social Security trust fund is currently projected to run out in 2032. At that point, benefits would drop by roughly 24% unless new funding is provided.

  “The default position in when the trust fund runs out is you cut benefits. Now, I don't think that's going to happen. But...that would be the largest peacetime tax increase in US history, about 1 1/2% of GDP.” – Andrew Biggs (19:29)

• Political incentive remains to kick the can, but by 2032 the issue will be unavoidable in presidential politics.

  “...the pattern for most of the past 40 years has been simply to cover our ears, cover our eyes, and kick the can down for the next Congress. But we're running out of time to do that.” – Andrew Biggs (20:54)

7. Learning from Other Countries

• The U.S. is unusual in providing very high Social Security benefits to upper-middle and high-income retirees. Other similar countries focus Social Security-type programs on poverty prevention, expecting the better-off to use private savings.

  “A high income couple retiring today can receive almost $100,000 in Social Security benefits. That's two to three times higher than what they would receive in Canada or the UK or Australia or New Zealand.” – Andrew Biggs (12:52)

• Biggs recommends a shift toward focused benefits:

  “Government is good at running welfare programs. Government is terrible at running pension systems... So government is good at running safety nets. ...It's terrible at saving for the future. So what we should do is simply expand 401ks and other retirement savings program ...while refocusing Social Security more on its role as a safety net program and less as an upper middle class entitlement.” – Andrew Biggs (24:12)

8. The Problem of Middle-Class Subsidies

• U.S. policy has become reliant on subsidies for the upper middle class, both in Social Security and health policy.

  “All the language, the discussion is about the safety net, all the money is actually for middle class, upper middle class people. ...the rhetoric just doesn't match the reality of where the money is going.” – Andrew Biggs (26:55)

9. Political Obstacles to Reform

• Raising the cap on Social Security taxes is often proposed by progressives, but the revenue is claimed by many future policy priorities (“opportunity cost”).

  “Anything on this would be very, very hard politically. ...I honestly don't think what you'd call the regular order can handle this. I think you need some sort of commission or, you know, extrajudicial process. Our political process just can't do this.” – Andrew Biggs (28:23)

10. If We Could Design Social Security from Scratch

• For new entrants to the workforce, Biggs envisions:

  • A strong minimum (anti-poverty) Social Security benefit.
  • Universal workplace retirement plan access and automatic or mandatory enrollment in savings plans.

  “You would want to have a strong minimum benefit so that people are not going to retire into poverty. ...That's something government is good at. ...On top of that ...that's where personal savings come in. ...Everybody should be offered a retirement plan at work...and enrolled in that plan.” – Andrew Biggs (33:24)

• Discusses the idea of “baby bonds” or accounts at birth, but concludes:

  “Conceptually I'm not against the idea, but the challenge is just members of Congress neither want to raise taxes nor cut benefits, but come 2032, they must raise taxes or cut benefits. So it's precisely the thing they want to do the least.” – Andrew Biggs (35:54)

11. Could a Blue Ribbon Commission Break the Deadlock?

• Biggs suggests a presidential commission could create political cover for both parties.

  “Some sort of commission ... it's doing this stuff in the regular order is just too difficult. ...the president has an opportunity there which really secretly both sides will be grateful for.” – Andrew Biggs (38:07)

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Notable Quotes & Memorable Moments

• “It's a retirement crisis for thee, but not for me.”
  — Andrew Biggs (07:24)

• “Nobody would invent a program today that pays $100,000 a year to high income retirees. ... But by the creep of the program where it's on autopilot, we're not thinking about it. That's where we got.”
  — Andrew Biggs (12:53)

• “In literally anything you do on this, you are going to be open to attack...they are the union for old people.”
  — Andrew Biggs (13:52)

• “You can borrow until you can't borrow. And when the markets lose faith, then interest rates skyrocket. ...Going through a bankruptcy ... is incredibly difficult.... Having something like that at the federal level ... will destabilize the world economy.”
  — Andrew Biggs (37:01)

• “There are moments in time when you actually have to have people who know something as opposed to know someone.”
  — Newt Gingrich (39:36)

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Timestamps for Important Segments

• Biggs’ Background & Career: 04:46–05:38
• Views on Retirement Crisis Perceptions: 06:24–08:21
• Why Americans Are Worried Despite Good Data: 08:38–10:26
• Problems with Policy Language & Reforms: 10:44–13:45
• AARP and Political Obstacles: 13:45–16:16
• What Happens If No Reform by 2032: 19:25–21:53
• International Comparisons: 23:08–24:57
• Shift Toward Targeted Social Security: 26:23–27:36
• Political Roadblocks & Progressive Proposals: 27:36–29:53
• Blank Slate Social Security Design: 33:03–35:09
• Possibility of a Blue Ribbon Commission: 37:55–39:25

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Conclusion

This episode provides a deep, evidence-based look at Social Security’s future, with Andrew Biggs challenging many popular perceptions about retirement security in America. Biggs advocates for honest public discussion, policy modernization focused on true anti-poverty missions, and creating political mechanisms (e.g., a bipartisan commission) that could enable real reform before an avoidable crisis arrives in 2032.

Transcript

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[Newt Gingrich]

On this episode of Newts World, Americans and the elected officials who represent them are worried about retirement. Many fear a retirement crisis of inadequate savings and incomes as the US Population ages in the real retirement crisis. While almost everything you know about the US Retirement system is wrong, Andrew Biggs provides economic insights and hard data to explain America's retirement savings situation. He argues the US Retirement system compares well to those of other developed countries. In fact, the typical US Senior is among the richest in the world. The retirement savings gap is overwhelmingly due to governments not funding benefits they promised. I'm really pleased to welcome my guest, Andrew Biggs. He is a senior fellow at the American Enterprise Institute where he studies Social Security reform, state and local government, pensions, and public sector pay and benefits. Before joining aei, he was the principal deputy commissioner of the Social Security Administration where he oversaw the Social Security Administration's policy research efforts. Andrew, welcome and thank you for joining me on Newts World.

[Andrew Biggs]

Well, thank you very much for having me. Happy to be here.

[Newt Gingrich]

What drew you into what I guess now is over 20 years of work on Social Security. What attracted you to taking this on?

[Andrew Biggs]

I was out of grad school. I was working in Washington, D.C. and I started thinking about going back to kind of more research oriented areas. And I remember at the time people were saying, well, do you want to work on taxes or do you want to work on Social Security? And it just struck me Social Security was the more interesting of the two issues. It lets you be a generalist. I mean, just speaking as a researcher, it lets you be a generalist while actually having a chosen profession. Social Security is so large, it covers every area of government, every part of people's lives. And so it just gives you an opportunity to look at a whole variety of different areas. And 25 years later, believe it or not, I'm still working on it. It's just been a fascinating issue to work on throughout my career.

[Newt Gingrich]

When you work on something for a quarter century, I'm curious, how have your views changed during that period?

[Andrew Biggs]

That's a very good question. I'd say in two ways. On Social Security, specifically, when I came into the issue, I was working at the Cato Institute, which is a very libertarian think tank. And that was the time when the sort of Social Security privatization movement was very active. And I was active in that. And I think that was a very interesting time. It sort of had to play out at the same time. When I look back at it, I think I worked on the George W. Bush reforms in 2005. I think it might have been better if we had tried to cut a deal then rather than wait since every day 10,000 baby boomers shift from becoming workers paying into the system who care about taxes to beneficiaries collecting from it who care much more about benefits. But over that time, I also learned a lot more about how well the US retirement systems work. If you'd asked me 20 years ago, are Americans saving enough for retirement? I would have said no, because that's what you read in the newspaper all the time. Later on, I started getting much more deeply into that issue. And you discovered Americans and the US Retirement system are really doing very well. That plays into how you think about Social Security reform. If Americans weren't saving for retirement on their own, then any cuts to Social Security I think would be hard to justify. But when Americans retirement savings are at record levels and poverty and old age is at record lows, you could start thinking about things a little bit differently.

[Newt Gingrich]

Given what may be the objective fact. There was a survey done in 2023 where 89% of the American people agreed that there is a retirement savings crisis.

[Andrew Biggs]

The survey data on the so called retirement crisis are very interesting. Almost every survey you conduct, if you ask Americans, is there a retirement crisis? They will say yes. And the one you cited is evidence of that. At the same time, if you ask retirees themselves if they would describe their own financial situation as a crisis, as a survey by Vanguard did several years ago, only 4% of seniors say yes. Similarly, when the Federal Reserve asks seniors, you know, are you finding it difficult to get by? Again, it was only about 4%. And today's workers are saving much more for retirement than people did in the past. That's unequivocal in the data. So it is really a perception. I had a chapter, it's a retirement crisis for thee, but not for me. There's a huge split in how Americans view the whole retirement system versus how they view their own retirement savings.

[Newt Gingrich]

Why then do you have this split between a general Sense that it's a huge problem, we probably can't fix it, or the political cost of fixing it will be huge versus the individual who's saying, well, you know, I'm actually pretty well off.

[Andrew Biggs]

Well, there's a substantive reason why people worry about retirement. If you're, you know, a 35 year old saying, okay, I'm really kind of getting started now, saving for retirement, what do I have to think about because I want to be able to maintain my pre retirement standard living once I retire, you have to know, okay, what kind of standard of living am I going to have in my 50s? That's hard to predict. You have to know the rate of return on the investments you're going to make. That's hard to predict. You want to know how long you're going to live and that's hard to predict. So you have a lot of things that are really very difficult. So it's understandable that people are worried about it. But on top of that, you have, I don't want to call it a conspiracy, but what I'll say is nobody has the incentive to tell Americans the truth, which is that our retirement system is working pretty well. You know, if you're in the financial industry, you know, what is the chance that they are going to tell you you're saving too much for retirement? They have a product to sell and they want to keep you buying it. Likewise, the media. Are you going to click on a article titled, you know, retirement crisis coming or are you going to click Americans doing okay? So they have an incentive. You know, they say if it bleeds, it leads. So they have an incentive to gin things up. And finally, in a political realm, there are people whose philosophical views, and I'll call it philosophical views because they're not really based in evidence, but they really doubt that people by themselves could make these sorts of decisions. They don't trust private industry and they would like to see an expanded role for government, make Social Security bigger and so forth. So once again, they're not going to tell you the good news. I had no incentive either way. This is purely an academic interest for me. It really is surprising that people who know better will still use the scare language to try to motivate people.

[Newt Gingrich]

In an article you wrote called we're going about Social Security Reform the Wrong Way, you make a strong case that the very language, the very way we talk about it makes it hard for us to really work our way through what we need to be doing. Could you expand on that?

[Andrew Biggs]

Well, when you think about, say, Social Security policy. Think about almost any other thing the government does, many other policy issue. What you want to say is, how do we make this government policy or government program work better at lower cost? So you're thinking about how the program works with Social Security policy. You're thinking almost entirely about the solvency of the Social Security program. And people are choosing from a list of items. We can raise the retirement age, we can reduce cost of living adjustments, we can increase the payroll tax, we can reduce benefits. And they're piecing these pieces of a puzzle together in such a way that they hope they get to, you know, 75 year actuarial balance or whatever measure they're trying to get to. And I argue that's just the wrong way. Think about it. It's unproductive because it assumes that the Social Security program is working perfectly with the one exception, that it is out of financial balance. But what are the chances that a program that was devised in 1935, when literally 50% of seniors were living in poverty is the right structure for a program for 2035 and beyond, when not 50% of the seniors are in poverty, but six and a half percent? When we have 401 s, we have the intern, we have all these innovations. If you were inventing Social Security today, you would think about it much differently. So coming out of the failure of the attempted Bush Social Security reforms in 2005, I really thought it was worthwhile to go at Social Security reform from a blank slate approach and say, what would be the kind of program we would devise for somebody who is entering the workforce today, who might retire 40 years later? What would that program look like? And so what we should think about then is, okay, how do we get from here to there? Not how do we patch together this system which is underfunded by $26 trillion? Now, obviously we have to fix the solvency issue. But thinking more broadly about the Social Security program, what we need for what it does opens up opportunities. Just as an example, a high income couple retiring today can receive almost $100,000 in Social Security benefits. That's two to three times higher than what they would receive if they were in Canada or the UK or Australia or New Zealand. Nobody would invent a program today that pays $100,000 a year to high income retirees. They can just save more on their own. But by the creep of the program where it's on autopilot, we're not thinking about it. That's where we got. So what we should be thinking about is not Simply what do we have to do to people's benefits to make the system solvent? But should we be paying that kind of money to people who clearly don't need it? It doesn't mean slashing, it just means looking over the long term. Do we want to refocus this program in a different way so it's thinking beyond this solvency box and just treating Social Security as any other program? We want it to work, but we don't want to have it with excessive costs.

[Newt Gingrich]

Wouldn't anything like that lead to almost Automatic attack by AARP?

[Andrew Biggs]

Unquestionable. One thing I remember back from the 2005 experience in the Bush White House, I remember talking to somebody about the legislative strategy for Social Security reform, which at the time I was very much a numbers cruncher, so I was not in charge of that. But at the time aarp was the 800 pound gorilla. And what I suggested to them is you either have to beat aarp, debate them and defeat them, or you have to figure out what kind of deal you have to make with them in order to get something to pass. And the Bush strategy just did. Neither of those things, I think was part of the failure. You just had to decide what you were going to do. In literally anything you do on this, you are going to be open to attack. You know, even if you cut benefits by a penny for the highest income retiree, AARP is going to say something. You know, they are the union for old people. You just have to be open to that. The only way you can avoid criticism by AARP and groups which knows are well to the left of AARP and Social Security would be simply to surrender to them. So I think the key componen for me in the book is that when we think about Social Security we need to speak to Americans in English, not in sort of actuarial numbers. It's very tempting to jump into how the Social Security benefit formula works and things like that. We just have to think conceptually about what we want to do. And it's very easy to say we should have some minimum benefit to keep retirees out of poverty. We're a rich country, there's not very many poor retirees. That's something we can do to give people confidence and to make the sacrifices that are involved with reform. Social Security doesn't have a minimum benefit. On the other hand, it doesn't really make sense to be paying $100,000 a year to two high income retirees. You know, nobody else does it. There's no policy purpose for it. That's speaking in English. Often discussions about Social Security are just in this actuarial mumbo jumbo of the bend points, the benefit formulas or the CPI W versus chained cpi. Things that just don't make any sense to people. It doesn't mean we lie to people, it means you convert it to English to terms they can understand. And I think that makes for a more compelling argument.

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[Andrew Biggs]

But wait, there's more.

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[Newt Gingrich]

Let's say we do nothing. At what point is there a crisis?

[Andrew Biggs]

Well, right now the Social Security Trust Fund is projected to run out in the year 2032. In last year, Social Security trustees report they predicted it would last until 2034, but Congress actually passed two bills this past year which made the insolvency happen sooner, which is the opposite of what we would want. But in 2032, when the trust fund runs out, Social Security is still collecting a lot of money, over a trillion dollars a year in taxes. Trust fund running up does not mean your benefits are zeroed out. But under law, it means the program could only pay out benefits equal to what it collects in taxes. That would mean that benefits have to drop by around 24%. Now, it doesn't mean necessarily you'd have to have an across the board benefit cut of 24%. A lot of people think that, and that would throw millions of seniors into poverty. I think the president or the administration at the time would have some discretion. But the default position in when the trust fund runs out is you cut benefits. Now, I don't think that's going to happen. But to avoid cutting benefits, if Congress says we just want to keep paying full benefits for everybody and we're going to raise taxes to do it, that would be the largest peacetime tax increase in US history, about 1 1/2% of GDP. Alternately, nobody likes to raise taxes, so ultimately they could just borrow the money. But when we think about the size of the debt and when you think of the dynamics of financial markets, you can borrow until financial markets lose confidence in your ability to repay. It could be any sort of trigger event which causes that loss of confidence. I personally think the federal government announcing as policy that our strategy for funding our biggest program is to Borrow money we can't possibly repay might be the trigger. So we face a number of very unpleasant choices and the habit. The pattern for most of the past 40 years has been simply to cover our ears, cover our eyes, and kick the can down for the next Congress. But we're running out of time to do that.

[Newt Gingrich]

The nature of politics is to avoid anything painful for as long as possible. So I'm hearing you say that probably not in 28, but certainly by 32. The presidential campaign may well be centered around this question.

[Andrew Biggs]

I think so, yeah. Even if for now, President Trump will be out of office before this insolvency happens. So again, the incentives are just not to focus on it. But you're having senators who will be elected this year, who will be in office in 2032 because they have six year terms. So it is starting to become a more salient issue. And the question, though is how our political process handles this. The difficulty we face on Social Security reform or any large issue is a number of hurdles. You have to come over to make anything pass into law. You have to get it through the House, which means a majority. Then you have to get 60 votes in the Senate, Then you have to hope the president signs it, and then most likely, somehow it ends up in the Supreme Court. It's just a very high hurdle to overcome. In other countries with parliamentary systems, it's a simple majority. And they've been able to reform their systems much better than we have. With the exception of France, most countries have reformed their pensions in the past couple of decades. So we really face a challenge.

[Newt Gingrich]

Are there particularly successful structural reforms that you think we should look at and begin to think about this conversation in.

[Andrew Biggs]

The book the Real Retirement Crisis. When I look at other countries, I try to say, what do other countries who are like the US do with pensions? You could look at what is happening in France or Liechtenstein, but they're just very different countries from the U.S. when I think of countries that are similar, I think of sort of Anglo countries like Canada, the United Kingdom, Australia and New Zealand. They're by and large free market, limited government countries. The interesting thing is our Social Security program is very different from theirs. They focus much more of their resources on preventing poverty in old age and much less on essentially running a pension system for upper middle class people. The example I use, if you have a high income couple today retiring under Social Security, they could get somewhere around $96,000 per year in benefits. If that same couple were retiring in Canada, they get less than $30,000 a year. In benefits. Now rich Canadians are not starving in retirement in Canada. They're just saving more on their own. If you were in the UK or if you're in Australia or New Zealand, the benefits are more generous at the bottom, but they are capped much lower level. And what that means essentially is, you know, people say, well, that turns Social Security into a welfare program. Well, government is good at running welfare programs. Government is terrible at running pension systems. If you look around the world, the sort of retirement savings gaps that people reference are almost entirely a function of governments failing to fund the benefits that they've promised. They run these programs. We owe trillions of dollars in money. We put nothing aside for it. So government is good at running safety nets. And you know, every developed country has a safety net. It's terrible at saving for the future. So what we should do is simply expand 401 s and other retirement savings program to expand retirement savings on top of Social Security while refocusing Social Security more on its role as a safety net program and less as an upper middle class entitlement. That's how other countries do this. And there's different formulas for it. Australia has means tested minimum benefit with universal 401ks. New Zealand has a universal benefit. Everybody gets it. It's not means tested. And if you want to save on top of that, it's voluntary. So there's different flavors of doing it. But the key is simply focus your resources where they're needed. Government shouldn't do things that people could, would and should do on their own. America, they're amply able to save for retirement on their own. Savings have never been higher. So let's, let's focus more on expanding that and refocus Social Security on its core mission.

[Newt Gingrich]

In the current debate about COVID subsidies for health insurance, I think we currently subsidize up to 900% above poverty at that point.

[Andrew Biggs]

It's not a poverty program.

[Newt Gingrich]

The bold proposal is to reduce that to 700% above poverty. In some ways we've become addicted to, to upper middle class subsidies by the government which are in a sense paid for by the very people who are getting the subsidy.

[Andrew Biggs]

You know, you have higher taxes on rich people to have higher Social Security benefits for rich people. It's very inexpensive to protect low income people via Social Security form. You know, if you google Social Security form, everything will be about anti poverty or safety net or things like that. That we could give every senior a Social Security benefit set at the poverty line so that literally no one has a sub poverty level. Income taking poverty to zero. That would cost about half as much as we're currently paying on the Social Security program. Although all the language, the discussion is about the safety net, all the money is actually for middle class, upper middle class people. If you're just a middle income couple retiring today at the full retirement age is now 67, you would get around $58,000 in Social Security benefits for a safety net program. That's three times the poverty threshold before you've touched a penny of your own savings, which are at record levels. So it's one of these things where the rhetoric just doesn't match the reality of where the money is going.

[Newt Gingrich]

How deep do you think or how intense do you think the pushback would be if you tried to go to that kind of program?

[Andrew Biggs]

Oh, I think it would be intense. Where I think there is some avenue for progress is this. If you ask progressives, what would you do to fix Social Security? Almost universally they'll say we should lift the cap on earnings subject to the Social Security payroll tax. This year you're taxed up to $176,000. You earn benefits on that same kind of capped earnings. Anything above that, you neither are tax nor your own benefits. And so they say, let's eliminate that. There's a variety of proposals to either do it immediately or phase it out. Now that's again, largest peacetime tax increase in history focused on a very small number of people. Then you say, well, why would progressives be willing to compromise on that? Isn't this what they want? The issue is that every other progressive priority depends on that very same money. Probably the best argument I can think of, of from a conservative standpoint or fiscal conservative standpoint of fixing Social Security by raising taxes on the rich is at that point the rich people are tapped out. You're not going to have Green New Deal, you're not going to have Medicare for all. You're not going to have all these other things that the progressives want simply because they've decided to use all that money to pay higher Social Security benefits to rich people. When you talk to progressives, they kind of get this, it's a standard thing in politics or public policy, but that every person working in their area thinks all that extra money is going to go to their priority. And there's somebody next door at the think tank who works in some other issue thinks they're going to get the money. Well, they're not all going to get the money. There's an opportunity cost even for progressives on this And I've noticed this, you know, as I've been talking about these issues over the years. Not just conservatives I talk to, but progressive policy people. Yeah, you kind of have a point. Anything on this would be very, very hard politically. And so it's how do you manage the process? I honestly don't think what you'd call the regular order can handle this. I think you need some sort of commission or, you know, extrajudicial process. Our political process just can't do this.

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[Newt Gingrich]

Peter Drucker used to say that if you weren't already doing something, would you start? And if the answer is no, why are you still doing it? If you had a blank slate today, given how the world has evolved and you could design the optimum lifetime retirement program, what would it look like?

[Andrew Biggs]

I think I'd do two things. The only reason we are going to pay $100,000 in benefits to a high income couple next year is we're doing that this year year. Nobody would invent that from scratch. And so in the book I go through this thought exercise of, you know, if I were inventing Social Security from a blank slate, what would it look like? You can't reinvent the program for people retiring today. They've paid their taxes, they've made their plans. But for somebody who's just entering the workforce today, they haven't paid anything into the system. They're not owed anything. So for them we can do whatever we want. And then you sort of phase into it. But the idea is you would want to have a strong minimum benefit so that people are not going to retire into poverty. I mean, we are the richest country in the world, we're the richest seniors in the world. It's not too much to ask to prevent poverty in old age so you would have some sort of universal benefit set at the poverty threshold that just guarantees against that people can go their working lives knowing with certainty they will not retire into poverty. That's something government is good at for retirement income on top of that, which is not anti poverty, but it's more sort of income replacement to maintain your pre retirement standard living. That's where personal savings come in. So I think that everybody should be offered a retirement plan at work, meaning a 401 or similar. Everybody should be enrolled in that plan. Now, this could be what people call automatic enrollment, where you have the chance to pull out, which is sort of what you have in the UK or New Zealand. Or it could be mandatory enrollment, which is what you have in Australia. And there's pros and cons to each. Compared to something like fixing Medicare, this is really a very easy problem to solve. It's just common sense.

[Newt Gingrich]

Aren't there a couple of programs like in Britain, where at birth you get an initial grant of money that's in.

[Andrew Biggs]

A savings account that's similar to what they're calling now the Trump accounts? I have mixed feelings in the sense that that a lot of the motivation for that is sort of a numbers game. They're just saying, well, we borrow the money we borrowed at 5%, we can invest it at 7% or whatever and have some sort of arbitrage on it. And for reasons that economists care about that most other people don't. I could explain why that doesn't make a difference. But I think the issue we face on that and this was sort of the motivation for the personal accounts for Social Security's sake. Back in the Bush era, before at that point, Social Security was throwing off extra money. We're collecting more in taxes than we need in benefits. And so the question is, what do you do with that money? Government was spending it and the accounts would have helped save it. The idea of these accounts at birth, baby bonds or Trump accounts is okay, you can get ahead of the game. The problem you face financially is that does nothing for Social Security in the short term. And members of Congress, they're going to have to come up with money to fund these accounts for the long term, but then they're still going to have to come up with money to address the Social Security problem that's staring tearing us down in 2032. In the short term, it makes the financial problem harder. And the short term is what most politicians think about. So I think that is the challenge. So conceptually I'm not against the idea, but the challenge is just members of Congress neither want to raise taxes nor cut benefits, but come 2032, they must raise taxes or cut benefits. So it's precisely the thing they want to do the least.

[Newt Gingrich]

Yeah, or some combination thereof managing to.

[Andrew Biggs]

Piss everybody off, which is why the threat is that you'll just borrow the money, which would really be rolling the dice. I don't know whether financial markets will bear it. And for the last nine years I've been on an oversight board handling the bankruptcy of the island of Puerto Rico. They had a similar thing. You can borrow until you can't borrow. And when the markets lose faith in then interest rates skyrocket. And let's just say going through a bankruptcy even at the level of 3 million people in Puerto Rico is incredibly difficult. Having something like that at the federal level, that's not just federal finances that will destabilize the world economy. And it just strikes me as very strange that we would risk that simply because we don't want to tell people we've got to change how we're doing days.

[Newt Gingrich]

Would Trump be smart to sometime, say in 28, appoint a blue ribbon commission that could report in 29 and start the conversation?

[Andrew Biggs]

I think he would be. Both Democrats and Republicans on Capitol Hill understand that their positions are not really politically tenable. When I speak to Republicans, they know that they're in a, an incongruous position where the position now from the president is we're never going to cut any benefits, but it's also we're not going to raise taxes. They know that that doesn't work and they're kind of looking for a way out of it. At the same time, in the Democratic side, if you go back to the early in the Biden administration, they had control of all of Congress and the presidency and they had bills in Congress to fix Social Security entirely by raising taxes. It had co sponsorship BY Something like 90% of House Democrats. They never brought it to the floor because they know that that kind of fix would be devastating to them politically. So everybody has these very strong positions in public. We will always do this. We will never do that in private. They know their positions are much weaker. Some sort of commission where I hate to say smoke filled rooms but but it's doing this stuff in the regular order is just too difficult. So I think the president has an opportunity there which really secretly both sides will be grateful for.

[Newt Gingrich]

I think that's fascinating and I have a hunch if that happens, you're going to be one of the people testifying and helping design it. So this is very useful.

[Andrew Biggs]

That's every policy long stream, there are.

[Newt Gingrich]

Moments in time when you actually have to have people who know something as opposed to know someone. So, Andrew, I want to thank you for joining me. Our listeners can follow the work you're doing on Social Security [e-mail] your new book, the Real Retirement Crisis why almost everything you know about the US Retirement System is Wrong is available now on Amazon and at bookstores everywhere. And I really appreciate your sharing with us.

[Andrew Biggs]

Well, thank you very much Mr. Speaker. It's been of a part Pleasure.

[Newt Gingrich]

Thank you to my guest Andrew Biggs. New World is produced by Gingrich 360 and iHeartMedia. Our executive producer is Garzy Sloan. Our researcher is Rachel Peterson. The artwork for the show was created by Steve Pendley. Special thanks to the team at Gingrich360. If you've been enjoying new TRO, I hope you'll go to Apple Podcasts and both Ruins. Rate us with five stars and give us a review so others can learn what it's all about. Join me on [e-mail] I'm Newt Gingrich. This is Newts World.

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