No, Social Security cuts aren't inevitable. Raise the income cutoff.

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• Matthew Reed is executive director of the Harkin Institute.
• Rayna Stoycheva is the director of retirement security at the Harkin Institute.

The recent report from the Social Security Administration about the longevity of the program has prompted new attention to the program's finances.  Unfortunately, much of the discussion is based on false assumptions.

Social Security isn't facing inevitable decline.  We don't have to make cuts.  And baby boomers aren't to blame.

That may sound strange, but the facts are the facts.

Last September, the Harkin Institute hosted a symposium on retirement security in Washington, D.C.  The keynote speaker was Stephen Goss, who is the chief actuary of the Social Security Administration.  He was direct: The driver of the projected shortfall in the Social Security fund is not the baby boom, the dependency ratio, or immigration.  It's increased income inequality.  He noted that when the Greenspan commission issued its recommendations in 1983, it knew about the baby boom, and it factored that into future projections. 

The flaw was in the income cutoff for Social Security taxes.  Right now, the first $168,800 of wages are subject to FICA tax; everything above that is not taxed and does not accrue Social Security benefits.  The limit was set at the 90th percentile of wages, and then indexed to inflation and average wage growth. Since 1983, though, the highest incomes have grown faster than the average, and more of the nation's payroll moved into the "untaxed" category.  Now the cutoff is at the 82nd percentile of wages. If the taxable income was maintained at the 90th percentile, the reserves accumulated in the Trust Fund would have paid full benefits until 2063, 30 years longer than the current estimates.

Social Security cuts would hit working-class people hard. Most Americans have nowhere near enough saved in 401(k) or similar accounts to sustain themselves in retirement. They're counting on Social Security to make ends meet. Americans who have faithfully paid FICA taxes for decades have a legitimate expectation that when it's their turn, they'll be paid what they were promised. 

And they can be. There's no shortage of proposals that would allow the program to keep faith with the folks who've paid into it. One would restore the income cap to the 90th percentile of wages. Another would eliminate the cap altogether, generating a long-term surplus. President Joe Biden proposed keeping the current cap but then subjecting income above $400,000 per year to taxation again. The economist Stephanie Kelton noted that simply allowing Congress to dedicate general revenues to Social Security could ensure full benefits. Currently, Social Security is completely financed by dedicated revenue sources and does not contribute to the debt.

No, we don't have to accept cuts as inevitable. We can choose instead to honor the promises made to hardworking Americans. It's up to us.

Matthew Reed is executive director of the Harkin Institute. Rayna Stoycheva is the director of retirement security at the Harkin Institute.