This is one of the most well-known government programs in the U.S., but that doesn’t mean it’s perfect. The program has helped seniors stay afloat for years, but it has a very clear end date. Lawmakers on both sides of the aisle are willing to fight for it, but they can’t agree on how to fix the program’s flaws so that it lasts longer.
Lawmakers and experts both agree that the program needs to be changed in order for it to be sustainable in the long term. The question now is what needs to be changed to meet the needs of current retirees while also making sure that future beneficiaries don’t get slighted.
Romina Boccia of the Cato Institute has written a harsh report about how the program not only doesn’t work, but is also sort of like a Ponzi scheme where current workers pay for former workers who are now getting benefits. “The trust fund is mostly made up of IOUs, or promissory notes, that are claims on future tax money.”
It wasn’t always this way, though. From 1935 to 2010, Americans paid more into Social Security than the program gave them in benefits.
What’s wrong is that this surplus wasn’t put into the Social Security Trust; instead, it was given to the rest of the federal government to spend in exchange for IOUs. The country’s population has changed a lot since then, and the difference between what it brings in and what it spends has now been made up.
Now, the program needs to cash in those IOUs. To do this, the Treasury Department will have to borrow about $4.1 trillion plus interest to pay for the program until 2033, when the Trust money runs out. “It’s like borrowing money to pay off credit cards,” says Boccia.
The most recent annual report from the Social Security trustees says that the Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay all scheduled benefits until 2033. This is the same as what was said in the previous report. After that, the fund’s reserves will be gone, and the ongoing program income will be enough to pay 79% of the benefits that are scheduled.
Social Security Reform
Several ideas have been put forward to keep the program from failing, such as lowering benefits, raising taxes or the retirement age, or turning it back into a welfare program based on income. However, none of these ideas were even considered before they were thrown out.
Pew Research found that “large majorities of Trump supporters (77%) and Harris supporters (83%) opposed any reductions in the Social Security program.” This is an issue that affects both Democrats and Republicans.
A Redfield & Wilton Strategies poll also found that 66 percent of Americans agree that Social Security needs to be changed.
However, “69 percent of respondents across all age groups were against cutting benefits to those on Social Security, 52 percent were against raising the retirement age, and 44 percent were against raising taxes on workers’ income.”
It’s clear that the program is popular, and because everyone pays taxes, Americans care about its future in a way that many other programs can’t.
If we want to get Social Security back to being financially stable in the long term, Boccia says, “policymakers should focus on reducing the growing costs of benefits.” This would “leave room for benefit reforms that uphold Social Security’s original promise to keep seniors out of poverty.”
Reforms should focus on cutting back on Social Security benefits and the work that goes into getting them.
This means that Americans should start planning how they will pay for their retirement on their own, though some may already be doing this. Gallup says that 37% of people between the ages of 30 and 49 who are not retired think they will get Social Security benefits, but 61% do not.
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