The future of Social Security is one of the top concerns of Americans, and Professor Scott Galloway recently made comments that may provoke strong reactions.
The New York University (NYU) professor, who is known for his controversial takes, said in an episode of his podcast that “somewhere between 10% and 30% of people who get Social Security right now should not receive it. Because they don’t need it.”
He said, “I’ll go as high as a third of senior citizens should not be getting Social Security.”
Galloway suggests this not just as a way to reduce economic inequality in the U.S., but also as a potential solution to cuts costs in a program that faces insolvency issues due to shifting demographics. Without any reform, the Social Security trust funds will be depleted by 2035. Benefits for all would be automatically cut at that point by 17%.
Here’s why Galloway thinks serious reform and dramatic benefit cuts are required.
Galloway described American seniors as “the wealthiest generation in the history of this planet.”
“The fact that every year we affect a $1.2 trillion transfer from young people, who are not doing as well as they have in past generations, to the wealthiest generation in history means something is wrong,” said the professor.
What Galloway is possibly referring to is the total benefits distributed to retired workers and their dependents every year. This group accounts for around 80% of total benefits paid, which is expected to be about $1.6 trillion in 2025.
Gen Z and millennials are struggling with debt, cost of living and stagnant wages, and payroll taxes makes up most of the program’s revenue. Eliminating benefits for the top 10% or 30% of wealthiest retirees, according to Galloway, could address some of the wealth imbalance and reduce the burden on young workers.
“I think the reason they call it the Social Security tax, not the Social Security pension fund is I don’t think you or me have rights to Social Security when we hit 65,” he said. “The notion that I paid into it, I should get my money back, actually the majority of people take out way more than they actually put in.”
Given that the average net worth of the top 10% Americans is $7.8 million, according to the latest Federal Reserve data, it’s likely that many of these individuals wouldn’t notice if their monthly benefits checks stopped.
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Galloway complained how due to the payroll tax cap, people who make significantly different incomes wind up contributing the same amount to the program.
In 2025, American taxpayers only need to pay Social Security contributions on the first $176,100 they earn. Because of this cap, a CEO who earns multiple millions this year might contribute the same amount of money to the social pension fund as a nurse or accountant who earns $176,100.
Eliminating the payroll tax cap for earnings above $400,000 is the most popular policy option to address the program’s financing gap, according to a survey by the National Academy of Social Insurance survey (NASI).
Eliminating this cap entirely isn’t a silver bullet and wouldn’t solve Social Security’s funding issue on its own, according to a report by the Manhattan Institute, a conservative think tank. Citing the Social Security trustees project, it said that this way the Social Security trust-fund exhaustion date would only be delayed by around 20 years.
However, the Manhattan Institute echoes Galloway’s belief about an unfair wealth transfer taking place and his call for limiting benefits to wealthy retirees.
“Because most retirees are wealthier than the taxpayers financing their benefits, Social Security today largely redistributes income upward, not downward … pledging that today’s workers will pay any tax necessary to ensure that even multimillionaire seniors can continue to receive benefits far exceeding their lifetime Social Security contributions is neither progressive nor sensible. In fact, raising Social Security taxes (rather than addressing benefits) would accelerate the largest and most inequitable intergenerational wealth transfer in world history,” says the report. “A more progressive reform would scale back the unaffordable (and, in many cases, not fully earned) spending promises made to wealthier baby boomers.”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
