Over the past three years, Congress’ solution to our budget crisis has been a temporary patchwork of fiscal bandages, passed at the stroke of midnight before critical deadlines.
Unfortunately, some have proposed balancing our budget by cutting Social Security benefits.
That’s unfair to seniors. And it’s not good for our country. Social Security is one of the most successful government programs in U.S. history. It drastically improved living conditions among the elderly and it needs to be protected for future generations.
Social Security benefits are paid for through the Social Security Trust Fund, which comes from payroll taxes and federal income tax that some beneficiaries pay on part of their benefits. Since Social Security is a separate Trust Fund and doesn’t take money from the U.S. Treasury, it doesn’t make sense to make Social Security pay for our deficit problems.
That said, we still need to make some changes to the Social Security system to keep it alive for future generations. People are living a lot longer today than they were when the system was first created. And because of the size of the baby boomer generation, the number of people receiving benefits will continue to grow much faster than the number of people paying in. So we have a math problem. When the Social Security Trust Fund runs out of money, the program will no longer be able to give seniors the full benefits they were promised. If we do nothing, the Trust Fund will run out of assets in 2033. And unlike the U.S. Treasury, the Social Security Trust Fund can’t spend money it doesn’t have.
Bipartisanship is the only way to get things done in a divided Washington. The last time Social Security faced a crisis, Republican President Ronald Reagan and Democratic Speaker Tip O’Neill created a bipartisan commission that led to the successful 1983 reform of Social Security. If we’re going to fix Social Security now, we need a bipartisan commission once again, separate from any deficit negotiations.
Recently, some policymakers have proposed changing the way inflation is calculated to something called chained consumer price index. I don’t believe that chained CPI is a fair way of calculating the cost of living adjustments seniors receive in their Social Security checks.
Others have proposed raising the retirement age. We’re already doing this – the retirement age is rising now due to changes made in that 1983 agreement. Raising the age further could be problematic – we have to keep in mind the millions of Americans working in physically demanding jobs. For them, a delayed retirement would be a potentially debilitating burden.
What does make sense is raising the arbitrary wage cap on Social Security payroll taxes. Currently, only the first $113,700 in an individual’s annual wages are taxed to help fund Social Security. By raising or eliminating the payroll cap we can raise hundreds of billions for the Trust Fund and extend the life of the program for nearly 75 more years. To make sure this proposal is fair to people at all income levels, individuals whose wages exceed the current cap could also receive a corresponding increase in benefits.
We also should look at improving the system for our most vulnerable seniors. Americans who work in minimum wage jobs, and those who are blessed to live longer than they expected, face particular challenges that the Social Security system ought to account for. Finding ways to bring more revenue into the Trust Fund will give us more flexibility to consider changes.
Social Security isn’t the cause of our nation’s fiscal problems. We need to make sure it’s around for future generations, and we have to start from the premise that we shouldn’t use Social Security to balance the budget.
