Despite a slightly lower projected deficit in Social Security and another comprehensive proposal to ensure the program’s solvency, lawmakers haven’t moved any closer toward doing so.
In a Senate Budget Committee
That’s because centrist Democrats like Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona aren’t likely to support measures that raise taxes. And the bill hasn’t received support from groups
“Acting as soon as possible is paramount,” Bipartisan Policy Center Director of Economic Policy Shai Akabas said at the hearing. “The longer Congress waits to strengthen Social Security's finances, the more drastic the changes will have to be and the more burden will fall upon those who played little or no role in creating the imbalance facing the program today. The lack of action by policymakers is also especially unfair to the millions of Americans who are trying to plan for their retirement. Failing to enact reforms will simply kick the can down the road, pushing responsibility for a long-term solution onto future lawmakers who will have to decide between inconceivable benefit cuts, impractical tax increases or the abandonment of the program's historical financing mechanism.”
Sanders’ bill would fix the program’s shortfall and boost benefits through tax increases that supporters of the legislation say will fall only on the wealthiest 7% of Americans. The legislation would add about $200 per month to benefits and tie beneficiaries’ cost-of-living adjustment to the
“Our job, in my view, is not to cut Social Security, is not to raise the retirement age, as many of my Republican colleagues would have us do,” Sanders said. “Our job is to expand Social Security so that everyone in America can retire with the dignity that he or she deserves and that every person in this country with a disability can retire with the security they need.”
Republicans and budget watchdogs testifying in the hearing pushed back on the notion that taxing the wealthy would work as a policy for fixing the deficit shortfall. The nonpartisan Committee for a Responsible Federal Budget could support certain aspects of Sanders’ bill, like lifting the current cap on wages subject to the payroll taxes that pay for Social Security, according to President Maya MacGuineas. However, the organization is also calling for ideas such as means testing of benefits and “price-indexing” of payments, she said.
“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 said. “Changes will have to be made. If wealthy beneficiaries are held harmless, others will have to face more benefit reductions or pay more in taxes. And the more we do this by raising their 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.”
In his opening remarks, Republican Sen. Lindsey Graham of South Carolina paid tribute to President Reagan and former Democratic House Speaker Thomas Phillip “Tip” O'Neill for striking the last significant bipartisan
“We're paying out more than we're taking in,” Graham said. “That's a fact. It slipped a year, but we're on a glidepath where, over time — Senator Romney knows this — the money being paid in and the money taken out doesn't add up. And if you don't do something now, you're going to have a draconian choice of cutting benefits and raising taxes to keep the thing afloat. But here's the good news. We’ve got some time if we act together.”
The proposals for yet another committee have failed to attract the backing of most Democrats and stakeholders seeking to protect and expand the current level of benefits, though. Republicans, Democrats and independents “believe that Social Security is more important than ever,” said Nancy Altman, the president of Social Security Works.
“They strongly oppose any and all cuts. They want to see benefits expanded, and they want the wealthiest to pay their fair share,” she said. “Any of us can die prematurely, leaving young children, rich or poor. Any of us can suffer a disabling accident or illness, rich or poor. All of us hope to live to old age. Social Security protects us against all of these financial risks through its life, insurance, disability, and joint and survivor retirement annuities. It does it more efficiently, securely, universally, effectively and fairly than its private sector counterparts, but it does not do so adequately.”
About half of retired Americans derive half of their income from Social Security payments, while one in seven over 65 years old use their benefits for about 90% of their income, according to Robert Roach, the president of the Alliance for Retired Americans.
“Given the decline of traditional pension plans and ability to accumulate savings because of stagnant real wages, greater numbers of Americans rely on Social Security in retirement,” Roach said. “Social Security benefits are not keeping pace with inflation. The Social Security cost-of-living adjustment is inadequate and does not represent the true measure of inflation seniors face when they buy.”
The benefits that aren’t meeting the needs of retirees today could fall even further below the necessary level when the program becomes insolvent in the middle of the next decade. To demonstrate the point, the Bipartisan Policy Center’s Akabas brought up still another commission’s
“Although this framework represents a comprehensive approach to restoring solvency, it was recommended six years ago,” Akabas said. “Since then, the problem has grown and the time to address it has shrunk to restore long-term solvency today. Policymakers would either need to phase in these policies much more rapidly, increase the size of the proposed adjustments or incorporate additional benefit or revenue changes. Let me be clear: If Congress waits another six years to act, it will become nearly impossible to retain Social Security’s traditional structure without aggressively curtailing benefits for current beneficiaries.”
