The recent release of the Social Security Trustees Report shows that Social Security is not experiencing the “crisis” that its conservative critics would have the public believe.
On Monday, the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (more commonly referred to as the Social Security Trustees) issued its annual report covering 2011 and making projections into the future. The report shows a growth in the Social Security Trust Fund during 2011 of $69 Billion, despite continued high unemployment and the retirement of early “baby boom” generation retirees. The Trust Fund, which stood at $2.7 Trillion at the end of 2011, is projected to continue its growth throughout the current decade.
Jean Friday, President of the Pennsylvania Alliance for Retired Americans, had this to say about the report and what it means politically, “Conservative policymakers from Alan Simpson and his deficit commission, to Pat Toomey and the “Super Committee”, to Paul Ryan and Mitt Romney this year have been advocating major Social Security cuts that would imperil the quality of life for current and future middle class retirees. Proposals such as the “Chained-CPI” cost of living calculation would have cut this year’s COLA from 3.6% to 2.8%. The Ryan Budget, passed by Congress on party lines this year and supported by GOP Presidential Candidate Mitt Romney, would fast-track unspecified Social Security cuts. However, to make these unpopular proposals to cut our most successful and popular social program politically viable, these conservatives and their friends in the media have sought to convince Americans that Social Security is experiencing a solvency crisis, and therefore must be reformed. This long-standing propaganda assault on Social Security has wrongly convinced many Americans that drastic changes are needed to preserve the program. Worse than that, it has given many young people the impression that they should not expect benefits of their own. House Majority Leader Eric Cantor said as much last year. This report disproves what the conservatives have been saying about Social Security.”
The Trustees report did indicate that the trust fund will begin to dwindle during the 2020s, and run out in 2033 if no policy changes are made. After that, Social Security would still pay benefits on the income it collects each year, which would amount to roughly 75% of promised benefits. However, only small changes are needed to increase the solvency of the program far into the future.
“Insolvency 20 or more years from now is no crisis," said President Friday. “As the economy slowly recovers, that outlook should improve. We certainly do want to make sure that Social Security is solvent forever. Instead of harsh cuts that hurt the poor and working class, while also hurting the economy, we should look to make Social Security taxes more fair. Most Americans will pay Social Security taxes on every dollar they earn for their entire lives. However, many rich Americans stop paying this tax before the spring thaw, because they reach the cap on taxable wages (around $110,000 in 2012) so quickly. The cap was initially intended to capture 90% of wages, but now only captures around 83%. By raising that cap, or lifting it completely, we could help the Social Security Trust Fund while sparing middle class families – the real drivers of our nation’s economy – from any tax increases or benefit cuts.”
Read the Trustees Report here:
resource-center/economic- policy/ss-medicare/Documents/ TR2012%20OASDI%20Final.pdf
The Alliance for Retired Americans has over 300,000 members and over 140 local affiliates across Pennsylvania. It’s President, Jean Friday, is a retired chemist and steelworker from Westmoreland County. For more information, visit our website at www.pennretiredamericans.org.