During his 1976 White House run, he declared that Americans—as long as they showed that "provisions" had been made "for their...non-earning years"—should be able to opt out of Social Security. Reagan's opposition to the capstone of the New Deal produced bitter fruit in his first year in office. As the Social Security fiscal outlook darkened, Reagan's Health and Human Services Secretary announced that the administration wanted to reduce Social Security benefits for people who had retired before they turned 65.

Republicans and Democrats alike reacted to the White House plan with a combination of disdain and derision. Reagan's plan was overwhelmingly repudiated. The Senate voted 96 to none against while a large bipartisan majority in the House opposed it as well.

What happened next would have been hard for anybody to predict at that time. The White House agreed to establish a bipartisan commission to look into how to cope with the system's long-term challenges and extend the solvency of the trust fund. Reagan appointed future Fed Chairman Alan Greenspan, and O'Neill appointed some of his own members to the Commission.

It offered a compromise that has had lasting effects on Social Security politics and policies. Some of the proposals were less than ideal; one that was ultimately enacted into law raised the regressive payroll tax, which hit working- and middle-class Americans harder than wealthier citizens. Nonetheless, the 1983 agreement did succeed in extending the trust fund's solvency for a couple of generations by raising the retirement age to 67 from 65 (to be phased in by 2027); imposing a six-month delay in the cost-of-living adjustment; and requiring government employees to pay into Social Security for the first time."