Social Security is the single largest source of income for people aged 65 and older. There are currently over 35 million seniors receiving monthly cash benefits. That number will begin to rapidly increase as more and more members of the baby-boom generation begin to retire. In several decades, the number of seniors on Social Security will double to 80 million.
Spending on Social Security, already one of the largest budgetary outlays for the federal government, is expected to double along with the number of beneficiaries in the coming decades.
Soon the Social Security Trust Fund will begin to pay out more money than it takes in. If current predictions are correct, in 25 years the surplus in the Social Security Trust Fund will run out, and Social Security will only be able to pay out about 75 percent of the benefits that are currently scheduled. But the situation is not as bad as it sounds. Even with scheduled cuts to Social Security, benefits will continue to increase – just not as much as they are currently scheduled to.
That being said, it is critical that reform of the Social Security program be undertaken so that Social Security benefits won’t have to be cut.
What needs to be done
While the program faces some long-term financing problems, these problems are manageable. Down the road, we're going to have to pick up some new revenues for the program – probably by raising the cap on how much of an individual's salary and wages are subject to the payroll tax.
Currently, only the first $106,800 in earnings are subject to the Social Security payroll tax. That means that the highest-paid people in America pay a smaller percentage of their earnings into Social Security than people who make minimum wage. That's unfair. Moreover, by subjecting all earnings to the Social Security payroll tax, we could eliminate the entire long-term shortfall between Social Security receipts and benefit spending. In other words, eliminating the cap on taxable earnings would ensure Social Security's solvency and soundness indefinitely
That’s just one example of how to fix Social Security without resorting to risky, radical solutions. There are other options
for closing the gap between Social Security revenues and benefits – all more or less controversial, but all capable of maintaining Social Security as the safety net for our nation's elderly, dependents, and disabled for decades to come. The only questions are when we decide to fix it – and which options we choose.
I am open to considering a number of modest changes to Social Security. I am not, however, willing to accept the so-called “partial privatization” of Social Security, which I believe would leave most future seniors markedly worse off than under the current system (even with the reduced benefits that would result if no action were taken).