There is much chatter in Washington, D.C., about Social Security going "bankrupt" in the next decade.
That's a dangerous myth that needs to be cleared up. While it's true that without remedial action the reserves in the Social Security Trust Fund will be depleted by 2034, the program could still pay beneficiaries 79 percent of their earned benefits out of ongoing payroll revenues — an unacceptable reduction, but hardly bankruptcy .
No doubt we need to take reasonable steps to improve the future solvency of Social Security . But Congress should not force those who can least afford it — seniors and the disabled and their families — to bear most of the burden.
Legislation introduced by House Social Subcommittee Chairman Sam Johnson, R-Texas, to extend the solvency of the program would result in a 30 percent benefit cut, which includes — among other things — raising the retirement age to 69 and triggering lower cost-of-living adjustments, which are already insufficient. The average Social Security beneficiary receives just $1,340 per month. At a time when a growing number of Americans rely on Social Security for all or most of their income, that's like trying to survive on minimum wage.
Asking Social Security beneficiaries to pay the price is not a fair — or successful — strategy for keeping the system solvent. There are modest and manageable solutions Congress could implement right now to preserve Social Security for current and future generations. Rather than cut benefits, Congress could increase Social Security revenues in a way that would keep the trust fund solvent for the rest of this century without burdening working Americans: an adjustment to the cap on Social Security wages and a small increase in the payroll (FICA) tax.
In fact, the new ranking Democratic member of the House Social Security Subcommittee, Rep. John Larson of Connecticut, is reintroducing legislation that — while having a negligible impact on working Americans' wallets — would do just that.
His Social Security 2100 Act would raise the payroll tax cap on Social Security contributions. (The current cap is $127,200.) Under the Larson bill, wages from $127,200 to $400,000 still would not be subject to Social Security payroll taxes. But any wages above $400,000 would now be taxed at the standard FICA rate.
Larson's plan also raises FICA payroll taxes by only 1 percent, phased in over a 25-year period. The congressman points out that, for a worker making $50,000 a year, nine weeks of his proposed payroll tax increase is equivalent to the cost of a Starbucks latte. By combining these two measures, Larson's bill would — as its name suggests — keep the Social Security trust fund solvent through the year 2100, without cutting benefits.
Poll after poll suggest that Americans of all political stripes support reasonable revenue-raising measures to keep Social Security solvent. Yet congressional advocates of Social Security "reform" never mention these simple solutions, insisting that any remedy include harmful benefit cuts or — worse yet — privatizing Social Security. Cutting benefits now to avoid future cuts is disingenuous at best and indicates that solvency is not the primary goal.
The high cost of living, health care, housing and college (among other expenses) means working families are less able to save for retirement .
Only half of today's employers provide any kind of retirement benefits. If anything, we should boost Social Security benefits, not cut them. Larson's bill provides a 2 percent across-the-board increase for all current and future beneficiaries and an improved cost-of-living adjustment based on the Bureau of Labor Statistics' Consumer Price Index for the Elderly.
Most of all, proposals that extend the solvency of Social Security on the backs of America's workers must be rejected. That's why Larson's Social Security 2100 Act is a great start.
— By Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare
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