As you can see below, every year for decades the Social Security trustees have been urging Congress to take action to keep the program solvent. These actions could have been gradual and minor and would have no affect on current beneficiaries.
Congress did nothing. Now we are faced with misinformation and lies about the program. Progressive politicians want to change the fundamental structure by having only so-called wealthy carry the funding burden thus abandoning the idea of us all sharing the cost of benefits for the current and future generations. They are pandering to create more division and envy among us.
Conservatives equally mislead taking a we need to control benefit cost often mislabeled as cut benefits approach.
Neither approach is justified or fair. If the American people want a strong government based retirement program they should be told the truth about the cost of funding it in the face of a changing, aging population. There is no need to change the basic funding approach as set up in 1935.
Every citizen must share the burden according to their means and proportionally share the benefits. That means the funding must come from those earnings on which benefits are based.
For those who see a partial solution as raising the taxable wage base, the ultimate benefits must rise based on those earnings albeit at a lower rate than lower income workers as is the case today.
Once the program is put on a solid footing, increasing benefits and the cost of doing so can be openly discussed. Would Americans pay an extra 1% of earnings to secure a greater income in retirement?
2003 Trustee Report
The combined OASDI Trust Funds are projected to become insolvent in 2042 under the long-range intermediate assumptions. For the trust funds to remain solvent throughout the 75-year projection period, the combined pay-roll tax rate could be increased immediately by 1.92 percentage points, benefits could be reduced immediately by 13 percent, a transfer of $3.5 trillion in general revenue (in net present value) could be made, or some combination of approaches could be adopted. Significantly larger changes, would be required to achieve solvency beyond 75 years.
2013 Trustee Report
For the combined OASI and DI Trust Funds to remain solvent throughout the 75-year projection period: (1) revenues would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 2.66 percentage points1 (from its current level of 12.40 percent to 15.06 percent); (2) scheduled benefits during the period would have to be reduced by an amount equivalent to an immediate and permanent reduction of 16.5 percent applied to all current and future beneficiaries, or 19.8 percent if the reductions were applied only to those who become initially eligible for benefits in 2013 or later; or (3) some combination of these approaches would have to be adopted.
The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes and give workers and beneficiaries time to adjust to them. Implementing changes soon would allow more generations to share in the needed revenue increases or reductions in scheduled benefits. Social Security will play a critical role in the lives of 58 million beneficiaries and 163 million covered workers and their families in 2013. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.
2022 Trustee Report
Lawmakers have a broad continuum of policy options that would close or reduce Social Security’s long-term financing shortfall. Cost estimates for many such policy options are available at http://www.ssa.gov/OACT/solvency/provisions/.
The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them. Implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits. Social Security will play a critical role in the lives of 66million beneficiaries and 182 million covered workers and their families during 2022. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.
The benefits are too generous. Social Security was an insurance program that has turned into a welfare program. If we both owned the exact same car and it was total in an accident, should the insurance payoff the car based on your income instead of the value of the car? If somebody could afford to pay for extra insurance coverage on his car, shouldn’t he be paid more? The higher paid workers are subsidizing the lower paid workers as it is now. The system never intended for people to live decades past the day they started collecting. Also the politicians have messed with the program over the years.
What you propose to do is to do away with the Federal Insurance Contributions Act (which is Social Security) and increase the income tax (income based taxes) to cover old age welfare, which benefits would be based solely on income only. Okay by me if they start it for workers born after 2005 so they know the rules just like you and I knew the rules. And as Social Security become insolvent, the money to pay claims would have to come from the general fund raising our national debt even more..
“The higher paid workers are subsidizing the lower paid workers as it is now.”
Dwayne – How are higher paid workers subsidizing lower paid workers???
If we all, get all of our FICA taxes paid, back in 8 to 10 years or less. The higher paid worker is getting the bigger subsidy.
Like economist Melton Friedman said – “Social Security is the biggest wealth transfer to the RICH ever devised.”
The math proves it.
Dwayne – I forgot a point or 2. The current workers are subsidy all of us.
I do not want to get rid of Social Security. I would like to see it changed. Tax the worker as it is now and have the employers pay in the same for each employee no matter what their pay. Then everyone gets the same monthly check.
“SSA was never intended to be the only basis for funding one’s retirement.”
So they say. My biggest concern about Social Security is how it impacts the poor, or marginal retirees. May be because that includes most of my family and many friends. And they are the salt of the earth.
All of my Social Security, and then some, now goes into investments, so a twenty something percent cut ten years from now won’t hurt me much, and I am by no means wealthy. There are millions better off who simply do not need benefits at all. But the same (20%) cut for many poor/marginal would just mean an increase in welfare, food stamps, or other social programs.
Whether means testing is “fair” may be irrelevant. SS says the record keeping and other costs would cancel out the benefits.
But perhaps, if benefit cuts become necessary, they could put a “floor”, or minimum benefit amount for those whose only income is SS.
It is already an income transfer program due to the progressivity. Just make it more so.
Congress act?? There will probably be a more dismal outlook when the Trustees give their report in 2033.
I’ve already posted my thoughts in the comments several times so no need to rehash them. The 2022 Trustees Report had in bold more generations to share in needed revenue increases or benefit reductions.
I’m on record as favoring a reduction in the annual cola by at least 1% per annum. Current recipients should be involved in keeping the program solvent going forward and not rely solely on workers exclusively. Other tweaks could be made that don’t involve taking from current employees/employers and self employed. Until that is considered, I don’t favor any change and we let it run on a cash in/cash out basis.
I don’t know if cutting the COLA by 1% will solve the problem. I for one am in favor of cutting the COLA altogether. My pension does not have a COLA. I saved for that future shortfall by taking advantage of my 401K and other investments. If you worked for 40 years then you knew about the effects of inflation and would have had a plan to deal with it.
By cutting out the COLA then may be people will finally realize that they have to take some personal responsibility for themselves and that the government can’t take care of them.
I know, personal responsibility is a bad word these days. Never going to happen.
Personal responsibility is great in principle. But what about the bottom 20 to 30 percent, what I like to call the working poor.
They do work paycheck to paycheck with nothing extra.
I never made more than $35,000 per year, with total income of $299,000 over a 35 year work history of witch 27 years had income. At times when I applied for any government assistance, I was told I made $50 to much per month, nothing for you.
I would like to see Social Security changed for sure. Everyone should get the same check. Why should the higher paid worker get the bigger SS check? His higher pay is his compensation during his working years.
Economist Melton Friedman said SS is the biggest wealth transfer to the rich ever devised. The data shows it. Since we know that most people get all the FICA taxes paid during work, back in SS benefits at 8 to 10 years. No one has paid for their SS benefits and the higher paid worker is in a much better position to take a haircut. Let the cuts happen to all people getting SS with income above $40,000. That includes me by the way.