The United States is overspending, that’s a truth. ‘On what’ is the debatable question. With an annual price-tag of $731 Billion (20% of the Federal Budget), Social Security is frequently on the chopping block. But can it be reformed without cutting benefits to seniors who desperately rely on it?
Right now, their are two strongly opposed views about Social Security from the Democrats and Republicans. And as per usual, we’re here to say they’re both being foolish.
The current Republican plans call for cuts to benefits, or privatizing Social Security altogether. In all fairness, either of those ideas would indeed save us money – however the idea that we can balance the budget by forcing the seniors who need help the most, and who have paid into the system all their lives and have planned on these benefits, is more than a little ridiculous. And while the open market may be doing well now, if Social Security were at its mercy, the next crash could wipe out the future of the 37 Million retired seniors who are trying to survive on those benefits.
The Democrats recognize the need to protect seniors, and so have dug their heels in so hard that the Republicans get lambasted in the press every time they suggest their cuts or privatization Has that position protected seniors? Yes, but it has also made a broader discussion of reforms near impossible to have.
So how can Social Security be reformed without cutting benefits to seniors? First, let’s dispel some major myths about Social Security in general:
No, the program is not “broke.” This has become a favorite talking point for politicians over the past few years, as they attempt to scare voters and win more votes. It’s not broke in the slightest, it just has a cash flow problem. Over the last decade or so, Congress began heavily borrowing from the Social Security Fund, paying for what they’ve taken in the form of special issue US Treasury Bonds, which while extremely valuable, aren’t liquid. The Treasury Bonds pay out interest into the Social Security Fund every year, so we’re making money off of them, but the interest is paid in – you guessed it – more Treasury Bonds. So what Social Security has now is not a long-term viability problem, but a short-term cash flow problem (Go figure, Al Gore’s “lock box” argument was right).
The number of people paying in per person receiving benefits is going to continue to drop! Nope, again not true. Has the percentage decreased since the program’s inception in the 30’s? Definitely. And the huge retiring Baby Boomer population isn’t helping. But do you know which generation is almost twice the size of the Baby Boomer’s? The Millenials, and the majority of them are not yet fully in the workforce and paying benefits. Are we likely to ever go back to the rates of the 1930’s? It’s doubtful, but the numbers will swing back out towards a more balanced position within the next few years as the younger generation gets into the workforce.
There are sensible reforms to be had, that don’t involve destructive cuts to benefits.
The easiest thing we could change that could have a major impact, would be to raise the income cap on who pays for social security. Many people don’t realize that Social Security taxes are only paid on a person’s first $113,700 of income. There are hundreds of thousands, if not millions of Americans who make much more than that but who don’t pay into social security after their first $113,700 every year. If we wanted to increase the financial viability of the program, the first step should be to raise that limit as there is no rational reason that those who are fortunate enough to be making $500,000, or $1 Million, or $300 Million a year shouldn’t still be paying into Social Security.
Second, Congress needs to start finding ways to pay back the money they’ve borrowed from the Social Security Fund so the program re-achieves it’s financial liquidity. Social Security isn’t getting more expensive just because more seniors are living longer, it’s getting more expensive because of how much interest its Treasury Bonds are accruing every year.
To his credit, President Obama has put Social Security and Medicare reform on the table for the current budget negotiations. But it’s odd to watch, as most Republicans have seemed not to notice, and many on the Left who are worried that benefits for seniors will get slashed, are pushing back on the President for his willingness to negotiate on them.
As the third rail of American politics, it’s dangerous for any politician to touch Social Security. But common-sense reforms are a possibility. Republicans need to back off their slashes on services seniors desperately need and the idea of privatization, and Democrats need to stop digging in their heels on any reforms, and start coming to the table with the changes that could be beneficial to all.