Expand a Program Headed for Insolvency?
(By: Jeff Szymanski, Association of Mature American Citizens)
Who would spend more money on something that, in the absence of reform, will be insolvent in just over a decade? Answer—’The Left’ of course. That is just what 150 Democrat members of Congress, who call themselves the Expand Social Security Caucus, want to do with Social Security. The Senate co-chairs are Elizabeth Warren (D-MA) and Bernie Sanders (I-VT), and the House co-chairs are John Larson (D-CT), Debbie Dingell (D-MI), and a freshman representative, Conor Lamb (D-PA).
That Social Security is facing challenges is simply not in dispute and should not be subject to “politics.” In 2018, Social Security expenditures (benefit payments) will exceed revenue received, most of which is generated from worker payroll taxes, for the first time since 1982. That trend will continue every year until 2034, the year The Social Security Trustees report the program will be insolvent and only able to pay about 79% of promised benefits.
What does insolvency mean? Full benefits continue now using surpluses from past years, when revenues greatly exceeded expenditures. But, without changes soon to shore up the program’s finances, everyone’s benefit in 2034 (sooner with a deep recession) will be automatically cut across the board by more than 20%. No one would be spared. That is what the law says must happen. The cuts would be devastating to all who receive benefits but especially for those who rely on Social Security for most of or their only source of income.
You would think any discussion on this issue and certainly any legislation introduced in Congress would aim to solve Social Security’s long-term financial difficulties to preserve the program for current and future generations. But no. That does not appear to be the goal of the Expand Social Security Caucus. To expand benefits for anyone, even if for only the lowest income beneficiaries, without addressing the structural problems facing Social Security is simply the height of irresponsibility.
But if a group’s main goal is to score some political points in the short term by putting Republicans on the defensive, or worse to make them look anti-elderly, it appears the Democrats simply cannot ignore the chance with the presidential election of 2020 just two years away. Slogans like “Expand Social Security” and “Medicare For All” make for great bumper stickers and 30-second television spots. What it takes to reform and preserve these important programs is too often a boring policy discussion that does not warrant attention.
AMAC has been and will continue to be an active proponent of The Social Security Guarantee Act. It is not a gimmick, like so many bills introduced on this topic, but a bold, comprehensive plan that makes modest changes now and over time so that no one will see across the board benefits cuts. By using a tiered approach to cost of living adjustments, making formula adjustments that protect lower income earners, and gradually raising the retirement age for future (not current or near term) recipients, AMAC’s plan protects Social Security without raising taxes.
AMAC’s plan even offers a new, voluntary savings plan titled Social Security PLUS, which is in addition to but not a replacement of traditional Social Security. It would allow younger workers to build wealth and obtain a higher return on their investment over time than relying only on traditional Social Security.
To read more about the plan, visit AMAC’s website.
Jeff Szymanski is a political communications and economic analyst for the Association of Mature American Citizens (AMAC), a senior benefits organization with 1.4 million members.