America's Torn Safety Net
March 25, 2011
America's Torn Safety Net
Constituents often ask what Congress plans to do about Social Security. It’s an issue that comes up at in-person town halls, telephone town halls, and from individuals who call my office. They want to know when the money taken from the Social Security Trust Fund is going to be repaid, because retirees expect to benefit from contributions they have made.
On this, there is good news, and then there is bad news. Let’s start with the bad news. Washington can’t ever hope to repay the IOU’s because they spent every last borrowed dollar over the last few decades. Plus, they borrowed trillions of more dollars from other sources to fund an ever-growing government.
But there is some good news – if you can call it that – Washington will never again be able to raid Social Security. According to the independent Congressional Budget Office, Social Security is now in a state of perpetual deficits, as more money will go out than comes in. In the next ten years, annual Social Security deficits will range between $28 billion and $120 billion. And over the next 75 years, Social Security has a projected $5.4 trillion unfunded liability.
Baby Boomers are now beginning to retire, and that puts tremendous pressure on the system. There are 3.3 workers for each beneficiary today, compared to 42 when Social Security was established in 1935. But, down the road, Generations X and Y may not even have access to full benefits. In 2030, there will be 2.2 workers for each recipient. At least they are being warned: Social Security statements now contain notices informing payees that the system is going to be completely exhausted in 2037. At that time, a 22% across-the-board benefit cut or 31% payroll tax increase would be the prescription if we waited until then for action.
Younger workers are paying for the benefits of today’s recipients. That is likely something they will continue to have to do in order to fulfill promises to current and near-retirees. But, it is unfair and misleading to suggest that their contributions will be available to them when they retire. Failing to act increases the odds today’s young workers will have limited access to Social Security.
While one reason to update Social Security is to make sure that we fulfill the mission of retirement security, the other reason is larger: the country’s burgeoning debt.
If $14.3 trillion in national debt seems daunting now, it is miniscule compared to what we face if we do not modernize Social Security, Medicare, and Medicaid and instead try to operate in the same way we are today. In only a matter of years, without changes, these three programs will consume the country’s entire federal budget. We would indebt further America to China and other foreign governments.
It may not be the most politically expedient decision to begin the discussion of saving and strengthening Social Security, Medicaid and Medicare, but the longer we put it off, the worse it becomes. The solution is not ignoring the problem, but addressing it.