America’s debt burden is caught in a death loop, and President Donald Trump’s policy agenda has accelerated that spiral. Among other consequences, the country’s race towards fiscal chaos might also plunge Social Security into insolvency, potentially erasing a $40 trillion buffer that has helped moderate wealth inequality over the past few decades.
Modern-day America’s chasm between the ultra-rich and the rest of the country hasn’t been this wide since the Gilded Age, when the wealthiest 5% held a third of all income while the bottom 60% of Americans lived below the poverty line. (Today, the top 1% hold 31% of the wealth, while the bottom 50% just 2.5%, according to the Federal Reserve). But according to researchers from the University of Pennsylvania’s Wharton School, the modern gap might have been even greater were it not for the redistributive power of Social Security, one of the single largest government expenses which has rarely been accounted for in wealth inequality assessments.
“Social Security is very large—it’s the main way most Americans save for retirement,” economist Sylvain Catherine said during a Wharton Q&A published this week. In fact, Social Security accounts for nearly half of total wealth for nine out of 10 Americans.
