Fixing Social Security

You state:

“… Correcting the current financial condition of Social Security means… First assuring sufficient revenue to pay current benefits. Second replenishing the reserve. Interest on the reserve bonds was important revenue to the trust. …”

Nope. The first and only requirement is the political will to make a change. However, that remains lacking, as it has since we first discussed the challenge during the Clinton Administration.

I wrote this in October 2017 – coming up on 9 years ago – nothing has changed:

“… Social Security Funding: In June 2017, the average Social Security benefit was $1,369. About 61 percent of retired workers count on Social Security to provide at least half of their monthly income. So, in 2035, when the Trust funds are exhausted, without action, benefits will be reduced to match what can be financed by payroll taxes. This is nothing new – it’s been known since 1983, which was the last time Social Security was reformed. See: https://www.ssa.gov/OACT/TR/2017/tr2017.pdf

Social Security Reform Over the Last 25 Years:

• November 5th, 1993: President Bill Clinton, by Executive Order #12878, created the Bipartisan Commission on Entitlement Reform (the Danforth Commission) to evaluate entitlement programs – specifically Social Security and Medicare. The Commission never reached consensus and couldn’t get all members to agree on even an Interim Report. Subsets of the commission members made their own proposals. None gained any traction, nor action. See: http://www.presidency.ucsb.edu/ws/index.php?pid=61571

• February 5, 2005: President George W. Bush made a reform recommendation to add personal accounts and change the COLA. These proposals triggered great criticism, and no action was taken. See: https://georgewbush-whitehouse.archives.gov/infocus/social-security/ See also: https://georgewbush-whitehouse.archives.gov/news/releases/2005/04/200504…

• April 27, 2010: The bipartisan National Commission on Fiscal Responsibility and Reform (often called Simpson-Bowles) met to recommend fiscal reform, including recommendations to reform Social Security. Despite widespread popular support, the report failed to get enough support to send it to Congress for approval.

• June 1, 2016: President Barack Obama, nearing the end of this second term, reminded us that Social Security’s finances needed strengthening. “We should be strengthening Social Security… it’s time we finally made Social Security more generous and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned.” No proposal was ever made. See: https://obamawhitehouse.archives.gov/the-press-office/2016/06/01/remarks…

• Today’s GAO report (GAO-18-111SP, “The Nation’s Retirement System: A Comprehensive Re-evaluation Is Needed to Better Promote Future Retirement Security” (https://www.gao.gov/assets/690/687797.pdf)) echoes President Obama:

“… (we) better ensure a secure and adequate retirement, with dignity, for all.”

But, it offers no plan of action other than another committee.

Retirement in America is a relatively new phenomenon. As recently as the 1960’s, only a handful of Americans successfully prepared for retirement. Very few had a retirement plan – defined benefit or defined contribution – and only a small minority of those workers vested, and only a subset of those who vested survived to receive the promised benefit. Due to the Depression and WWII, many had breaks in employment, which depressed their Social Security benefits. Most wage earners had minimal savings – few owned mutual funds or certificates of deposit. Most relied on passbook savings at their bank or savings and loan. Work was much more physical, blue collar.

Just 50 years ago, retirement in America was very different; most worked until physically spent then “retired” to a mostly sedentary lifestyle and survived maybe 10 or so years.

… Congress should start first with Social Security funding, while allowing plan sponsors more time to consider, adopt, and implement PPA 2006 automatic features.

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