Social Security and Medicare have become pillars of our society in the decades since they were introduced and fully implemented, and because of those two programs, America’s senior citizens are able to retain independence, dignity and quality of life and avoid falling into poverty in their later years, regardless of the amount of wealth they amassed during their working years. That doesn’t figure into the calculation — you paid in, and you get to receive the benefits of your investment every month for the rest of your life once you reach retirement age.
Every year, the board of trustees that oversees Social Security and Medicare releases a report on the financial health of the two programs. This year’s report, released last Friday, shows that in spite of the fact that Social Security outlays were more than receipts last year, the program is solvent for decades, with the combined Social Security Trust Funds holding sufficient assets to pay full benefits for the next 25 years with no changes to the system at all.
There was quite a lot of squawking and shrieking as those ideologically opposed to Social Security furiously tried to spin the fact that more was spent than taken in. The program was, depending on who was doing the shrieking, either in crisis, in dire straits, broke, bankrupt, insolvent, or doomed.
Except, of course, it is none of those things.
Social Security can not, by law, run a deficit. It can only make payments it has the funds in reserve to cover. The only option Social Security has is cutting benefits if it gets into fiscal difficulty. In plain English, this means that Social Security does not — can not, by law — contribute a single dime to the deficit, and that is why it should never be a part of any deficit reduction deal.
Last year’s report projected that if no adjustments to the system are made, Social Security would face a funding gap after 2037, when benefits would need to be reduced to 78% of current payments through 2084. Still, there is no need to panic. The fix to fill in the shortfall is simple: scrap the payroll tax cap and collect it on all income, not just the first $106,800 that an individual earns in a year, as is the case now. That simple tweak would assure full funding of Social Security for at least 75 years.
There is a legitimate need to have a conversation about the debt and deficit that we as taxpayers and citizens are going to have to deal with, but Social Security should not be a part of that conversation. The so-called liberal media mocked Al Gore when he said the words “lock box” but he was right. Social Security ought to be put over there, aside from everything else, because it is a separate, self-funding entity.
Every time they try to talk about Social Security in the same conversation as deficit reduction, call them on it, because that is a deliberate tactic that is utilized dishonestly by those who want to see the program ended and privatized. Conflating the dedicated revenue stream of Social Security with general fund expenditures fosters not one, but two, insidious myths. The first is that Social Security adds to the deficit, and the second is the perception that feckless government officials are already illegally raiding the trust funds and stealing the contributions that hard-working Americans have already paid in.
Instead, we should have the conversation about Social Security after the budget fight is settled and the debt ceiling is raised, and we should have that conversation in the cold, clear light of day.
This post is part of a series I am writing as a blogging fellow for the Strengthen Social Security Campaign, a coalition of more than 270 national and state organizations dedicated to preserving and strengthening Social Security.