NB: As we mentioned yesterday, we will be experimenting with new formats for the Briefing. Today we are doing a short piece on a single topic. As always, we welcome your feedback.

The Trump/Vance View Of Social Security Versus The Traditional View

One of the ways in which both Donald Trump and his new running mate JD Vance have diverged from traditional Republican orthodoxy has been entitlements. AEI’s Andrew Biggs has a very good and thoughtful piece defending the conventional view.

Biggs plucks a quote out of Vance’s interview with the New York Times’ Ross Douthat (which we mentioned in our previous briefing on Vance’s policy views) as summarizing (correctly, we think) his views on Social Security: “Take those seven million prime-age men not in the labor force. Those people are supported, very often, by public resources. You shift millions of those men from not working to working; you increase wages across the board; you increase tariffs; and I think that you buy yourself a whole hell of a lot more than the nine or 10 years that the actuaries say that we have. You get more revenue, yes, from tariffs, but from more people being in the labor force, from higher productivity growth, from higher wages, from transitioning young people who are not working into the work force.”

Vance’s point is simple: the best way to improve Social Security’s soundness is to increase labor force participation and productivity, increasing the amount of hours worked and the value of each of these hours.

Biggs makes an equally simple point in response: the Social Security actuaries already have very generous assumptions of future growth, so that even if the growth that Vance says he wants materializes, Social Security will still be actuarially unsound.

Ok.

Biggs’ point is well taken, but we still think that, on balance, Vance has the better side of the argument, and the reason for that is that in any scenario without strong productivity growth, strong labor force participation (and natural population growth, but this is a separate issue) Social Security will be in trouble.

A long time ago (we believe it was during the Romney campaign, so over 10 years ago), we called it the Entitlement Quadrant: without growth, even reformed entitlements will prove unsound; and with growth, entitlements will prove affordable.

The fundamental reality of entitlement spending in the United States, as in the West in general, is that we have not had the growth–productivity growth or population growth–that we believed we would have in the Post-War Era. Our entire social-political systems are built on this assumption of growth. If that growth is not restored, we will have much more pain than simply cutting retirement benefits.

Meme of the Day