Social Security’s scary unfunded liability
Laurence Kotlikoff, writing an op-ed in The Hill, laments that no one is addressing Social Security’s $43 trillion unfunded liability, up $9 trillion from last year. Buried at the end of the April 2019 Trustees report, he calls it “the most important and scariest number in the report” and notes it was ignored by The Treasury Secretary and his fellow trustees in their summary statement. Kotlikoff says unfunded liabilities tell old people what they’ve been promised won’t likely get paid in full and tells the young that they could be burdened with up to $43 trillion in extra taxes whose payment will provide them absolutely nothing in return. Kotlikoff does not advocate for traditional Social Security reform but instead favors freezing benefit accrual under the current system. He states we should pay current retirees and current workers (when they retire) every penny now owed but not let anyone earn rights to extra benefits under the old system and require all workers to contribute 10 percent of their pay to a Personal Security Account (PSA). The government would make matching contributions on a progressive basis to the PSA accounts of lower income people. According to Kotlikoff, PSA reform would more than eliminate Social Security’s unfunded liability and allow for gradual elimination of the Social Security payroll tax. “Today’s and tomorrow’s workers will end up far better off under this reform compared with their fate if Social Security’s ink-red blood continues to pour out of the current system.” Read the full piece here.
The Association of Mature American Citizens (AMAC) believes Social Security must be preserved and modernized. This can be achieved by making modest changes in cost of living adjustments and the retirement age, with no additional taxes on workers. AMAC advocates for a bipartisan compromise, “The Social Security Guarantee Act,” taking selected portions of bills introduced by former Rep. Johnson (R-TX) and Rep. Larson (D-CT) and merging them with the Association’s own well researched ideas. One component is Social Security PLUS, a new yet voluntary early retirement plan that would allow all earners to have more income available at retirement. This component is intended to appeal especially to younger workers. AMAC is resolute in its mission that Social Security be preserved and modernized and has gotten the attention of lawmakers in DC, meeting with a great many congressional offices and their legislative staffs over the past several years. Read AMAC’s plan here.