By Robert Pilkey
In order to justify benefit cuts, conservative politicians and their followers are deliberately sowing confusion about the relationship between the federal deficit and Social Security, the most popular and effective government program in our nation’s history. The truth is that Social Security has not added one dime to the deficit and claims to the contrary are flat-out false.
Social Security, by law, cannot add to the deficit. The Social Security Act of 1935 requires that funds collected via the Federal Insurance Contributions Act payroll tax, go directly into the Social Security trust fund, to be used solely to pay out benefits. By federal law, general revenue money may not be used to pay Social Security benefits, thus prohibiting Social Security from borrowing.
The Social Security Trust Fund currently runs a $2.5 trillion surplus (www.ssa.gov) and The Economic Policy Institute estimates the surplus will grow to $4.2 trillion in 2024. With no changes at all, Social Security is projected to pay 100 percent of benefits through 2037.
After 2037, Social Security will be able to pay 75 percent of benefits through 2084. The projected shortfall is the result of slower than expected wage growth, a growing share of income accruing to high-income workers (above the $106,800 contribution cap), and a greater share of employee compensation being paid in the form untaxed benefits, like health insurance (www.epi.org).
The projected shortfall, still decades away, is by no means a crisis and can be corrected without cutting benefits. For example, in 1983, 10 percent of all earnings were above the cap of $106,800, and therefore not subject to the Social Security payroll tax. In 2008 however, that share had grown to 16 percent. By eliminating the $106,800 cap, the 2037 shortfall would be fully funded for 75 years (www.prospect.org).
Another deficit falsehood is lumping Social Security’s projected shortfall with the Medicare and Medicaid debt. Social Security does not face the same dept problems as Medicare and Medicaid, because Social Security payouts are not affected by rising health care costs.
Social Security is a defined pension plan sponsored by the federal government. It belongs to the people who work hard all their lives and contribute, along with their employers, from their very first paycheck to retirement. Half of all households have no retirement savings accounts. Of those who do, 50 percent have less than $45,000 in their accounts (www.epi.org). Social Security will distribute benefits to over 53 million citizens this year and according to the Center on Budget and Policy Priorities, lift 20 million of those out of poverty.
Grandpa and Grandma’s monthly social security checks are not the reason we have a huge deficit. Social Security is under attack because its success runs counter to conservative claims that government can’t do anything good.
Americans must not allow themselves to be tricked by politicians bent on cutting their Social Security retirement benefits. Now is the time to strengthen Social Security, not cut it.