A simple but not easy repair
Social Security is in significantly worse shape than thought, the Obama administration reported,which ought to prompt action to shore up a vital social insurance program that serves 56 million Americans.
But don’t bet on that happening anytime soon. Even though the problems facing the Social Security Trust Fund are relatively simple to solve, there is little appetite among lawmakers to take the necessary actions.
Experts think one of two approaches would work. Either raise the ceiling on payroll taxes to expand the revenue stream -- the cutoff for income subject to tax is $110,100 for this year -- or raise the age at which seniors can begin to draw on the funds.
A combination of higher cost-of-living adjustments and sluggish growth in wages is pinching the fund right now. The report said reserves would be exhausted by 2033, three years sooner than projected last year. The outlook for Medicare was roughly the same as the previous year. However, that program requires major repairs to remain afloat as the cost of health care rises and the population ages. Together, Social Security and Medicare now account for about a third of the federal budget.
"The Social Security outlook has worsened significantly relative to last year’s report," Charles P. Blahous III and Robert D. Reischauer, the public trustees of the programs, said in a joint statement. "By almost any objective measure, the financial health of the Social Security system has entered a concerning decline."
True, but here’s a little perspective: Even without new revenue, the program can pay full benefits for years and partial benefits after that. "After 2033, even if Congress does nothing, there will still be sufficient assets (from payroll taxes) to pay about 75 percent of benefits. That’s not acceptable, but it’s still a fact that there will still be substantial assets there," said the commissioner of the Social Security Administration, Michael Astrue.
Which makes this report like a warning beacon flashing far in the distance. It’s easily ignored. The problem with Social Security isn’t dire -- at least at the moment -- and lawmakers are wary of making changes to a popular program at the risk of angering a large voting bloc.
Peter Goldmark put it well in his recent column for Newsday: "Our real problem isn’t decline; it’s paralysis. And the first step out of paralysis is to tell it like it is. But no one is doing that. . . . Neither (presidential) candidate acts like someone seeking to build a broad public mandate for serious action. Their words seem intended to please the crowd and avoid leading us through a serious thought process about what the country needs."
That’s certainly true of Social Security, but it’s true of many other looming fiscal challenges as well.