Since 2001, Social Security benefits have increased by 21 percent above inflation. No elected official seeking to remain elected will dial those benefits back.

Senator John Thune (South Dakota), the second-ranking Republican in the U.S. Senate, has suggested that Congress take up Social Security reform as part of its legislation to increase the federal debt limit. With Social Security's long-term funding gap now topping $20 trillion, there is no time like the present – no time, that is, except for the past. New data from the Congressional Budget Office suggest that, had Congress acted on Social Security reform two decades ago, the federal government's largest spending program could have been made solvent with only a modest impact on the incomes of average retirees.

Back in 2001, I served on the staff of President George W. Bush's Commission to Strengthen Social Security. While the commission did not agree on a single reform plan, two members – economists John Cogan of Stanford University and Olivia S. Mitchell of the Wharton School – argued for freezing the value of Social Security benefits in inflation-adjusted terms. Benefits wouldn't be cut, but Americans retiring in the future wouldn't receive higher benefits than today's retirees, as the current benefit formula requires. That single change would have restored Social Security to long-term solvency.

But freezing Social Security benefits came with the risk that seniors would have little else to rely upon in old age. In 1995, for instance, the New York Times warned of a great retirement crisis . . . widely anticipated for the Baby Boomers who begin to reach retirement age in 2010. Even wealthy seniors would not escape this crisis of inadequate incomes, the Times feared. Reducing Social Security would only worsen the problem of poverty in old age. The same fears, and the same arguments, are heard today.

Yet new data from the Congressional Budget Office show that, had Social Security benefits been frozen in 2001, retirees' average household incomes in 2019 would have been reduced by just 3.9 percent. Seniors still would have been better off than ever before, while knowing that their Social Security benefits were secure, rather than facing a 20 percent potential cut when Social Security's trust funds run out in the mid-2030s.

In late October, the Congressional Budget Office (CBO) released new household-income figures compiled from Internal Revenue Service data. The CBO figures, running from 1979 through 2019, include salaries, investment income, welfare payments, Social Security, and even Medicare benefits, while subtracting the various federal taxes that Americans pay.

The CBO data show that in 1979, the average American over age 65 had a household income after taxes and transfers of $43,000 (all dollar figures are inflation-adjusted to 2019). Seniors' incomes averaged 23 percent below those of working-age Americans. Retiree households were more than twice as likely to live in the poorest fifth of the overall population as to live in the richest fifth. The 1970s stereotype of retirees eating cat food, if not accurate, at least reflected some semblance of seniors' reality.

Four decades later, the picture is radically different. By 2019, average incomes for over-65 households had grown to $97,300, a 126 percent increase. For non-elderly households, average incomes rose from $58,795 to $104,297, just 77 percent higher than 1979. The income gap between seniors and working-age Americans in 2019 shrank from 23 percent to just 7 percent. Today, seniors are nearly twice as likely to live in the richest income quintile as to live in the poorest quintile.

How did this amazing turnaround of U.S. seniors' economic status happen?

Higher Social Security benefits certainly helped, increasing by 75 percent since 1979. But the real story is that past fears of a retirement crisis were entirely misplaced. Seniors' benefits from pensions and 401(k) accounts grew by 337 percent, despite claims that America's retirement system was broken. Wages earned by over-65 Americans rose by 136 percent, despite claims that declining health and age discrimination would prevent Americans from working longer. Medicare benefits per household increased by 241 percent. Sweetening things further, retirees' average tax rate fell from 22 percent of their incomes to 17 percent, counting all federal taxes they paid.

This amazing increase in retirees' incomes means that even freezing Social Security benefits, as the 2001 Bush Commission discussed, wouldn't have prevented average retiree incomes from increasing to record-high levels. For the average retiree household, the difference would have been scarcely noticeable.

There's no getting back lost opportunities. Since 2001, average Social Security benefits have increased by 21 percent above inflation, and no elected official seeking to remain elected will dial those benefits back. Those costs are now baked in the cake.

Moreover, even record-high average retiree incomes today don't mean that every retiree is doing well. While poverty in old age is at record lows, millions of seniors still have inadequate incomes.

And so, instead of an across-the-board benefit freeze, I've argued for gradually transitioning Social Security to pay a flat minimum benefit that would guarantee against poverty in old age, while simultaneously enrolling all employees in retirement plans to build savings to supplement that base. That model already works in Australia, the United Kingdom, and New Zealand.

But Social Security isn't going to reform itself. Since George W. Bush's failed 2005 reform effort, Republican officials have largely steered clear of the issue. That leaves congressional Democrats as the only team on the field. And that team, at least in the House, has nearly universally co-sponsored the Social Security 2100 Act, legislation that would fix Social Security's shortfall entirely by increasing taxes, and then increase taxes further to pay across-the-board benefit increases to both current and future retirees. Unless conservatives find their feet on Social Security reform, Americans will face a nearly one-fifth increase in what already is the largest tax most of them pay.

Yet these new CBO income data show that when Americans increase their savings and delay retirement, as most have done, ever-increasing Social Security benefits aren't necessary for seniors to have a secure retirement. Conservative-leaning policy-makers need only design Social Security reforms that match this reality.

Andrew G. Biggs is a senior fellow at the American Enterprise Institute. He previously served as the principal deputy commissioner of the Social Security Administration, as well as working on Social Security reform for the White House National Economic Council in 2005.