Despite gaining a year of solvency, social security is quickly heading for a bust.
According to the Social Security Board of Trustees’ annual report on the financial status of the Social Security and Medicare Trust Fund, without legislative reform, the combined assets of the Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds are expected to be depleted in 2035.
This is one year later than expressed in last year’s report, mostly due to a healthy economic rebound, as businesses got back up and running and wages improved payroll tax revenues, which, in 2035, will cover 80% of benefits, also up from 78% predicted a year ago, reports The Los Angeles Times.
However, in spite of the findings above and proponents who claim that Social Security is stronger than reports assert, the June 2 dispatch has many calling for reform to protect workers and retirees, help improve economic growth and avoid financial and policy crises that across-the-board benefit changes or cutbacks would bring. For those same many, reform support means raising taxes.
On June 9, a number of high-profile Democrat senators, among them Bernie Sanders (D-Vt.) and Elizabeth Warren (D-Mass.), introduced the Social Security Expansion Act at a Senate Budget Committee hearing. The bill, which rests upon adjusting tax payment requirements for the wealthiest in the U.S., would increase benefits by $2,400 annually and ensure a fully-funded Social Security program for the next 75 years.
However, the Social Security Expansion Act is unlikely to pass due to a divided Congress and a lack of bipartisan backing. According to Financial Planning, Democrat Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) won’t support a bill that raises taxes. Additionally, at the Senate hearing, Sen. Mitt Romney (R-Utah) flat-out said, “This bill has no chance whatsoever of receiving a single Republican vote in either House. So it will not pass,” reports CNBC.
In his recent opinion piece in The Wall Street Journal, former Sen. Rudy Boschwitz (R-Minn.) forwards a number of reform proposals that could help the Social Security outlook, including raising the full retirement and early eligibility ages, changing new recipient calculation methods and taxing Social Security incomes for higher-bracket taxpayers.
He also recommends slowing the growth of benefits for new and existing recipients, something Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, has addressed.
“I find it really hard to understand those who advocate more taxes on the rich while ruling out slowing the growth of benefits for the same people,” MacGuineas states, per Financial Planning. “Changes will have to be made … the more we do this by raising their (wealthy beneficiaries) taxes, rather than reducing benefits, the less revenue from that group will be available for other priorities. You can only tax millionaires and billionaires so many times.”
Opponents of wealth taxing feel the same way, which will keep legislative Social Security reform at a research and discussion level in the short term. But 13 years isn’t that far away when it comes to the insolvency of a program that insures workers and their families have income available to them at retirement, death or disability.
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