Last week the Social Security Trustees’ Report was released, which confirmed other estimates that the Social Security Trust Fund will be depleted in 2033. Once exhausted, all retirees receiving Social Security Benefits will see a 23% cut in benefits, according to the Congressional Budget Office. In addition, the Trustees’ Report also says that the disability insurance trust fund will be depleted the following year, leaving additional Americans with fewer benefits. This Trust Fund Cliff represents one of the country’s most significant crises if nothing is done.
Under current law, whenever the Social Security program brings in more revenue than is needed to pay benefits, the excess funds are loaned to the federal government to collect interest. Since 2011, payable benefits have exceeded payroll taxes, and since 2021 payable benefits have exceeded all revenues, including interest incurred on the funds loaned to the federal government. Since then, Social Security has been redeeming the bonds issued by the Treasury Department and getting back the trillions of dollars the government has borrowed. However, this latest announcement by the Social Security Trustees puts the timeline for the total amount to be paid back to Social Security in 2033, at which point the Trust Fund will be insolvent.
The bottom line from this announcement is that if nothing is done, as President Biden has proposed, millions of Social Security beneficiaries will see their benefits cut, and a large portion will fall into poverty. Unfortunately, President Biden has an incentive to do nothing to avoid this problem: the longer Democrats wait, the more likely the only solution is tax increases. However, the CBO and Social Security Chief Actuary have shown that increasing taxes will not solve the problem. Sadly, millions of voters believe that simply removing the income cap on Social Security taxes will solve the problem. However, this turns Social Security into a welfare program where recipients will never recover the amount paid into the program. Currently, a person paying the maximum amount in Social Security taxes will be repaid the total amount paid by them and their employer in less than ten years, and the average life expectancy for someone reaching age 65 is to live an additional 13 years. Someone making a middle-class income will receive full benefits in less than three years of retirement.
With only a decade before the Trust Fund is depleted, it is time for seniors to demand action from their elected officials. Members of Congress from both sides of the aisle should come to the table and find a solution to Social Security insolvency. It has been done before under President Reagan and can be done again. AMAC has developed the Social Security Guarantee as a road map to achieving solvency and ensuring the program retains its role as an anti-poverty program rather than follow the Senator Bernie Sanders route of becoming a socialist welfare program.
AMAC Action will continue to fight for responsible changes to guarantee the program for current and future retirees. Learn more about the Social Security Guarantee here.
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