The facts and figures associated with Social Security funding are stark – Social Security is running out of money. Lack of proper funding for aging demographics has created a capital imbalance which must be addressed. Today’s 56 million recipients currently receive $3 in benefits for every dollar they paid into the system. By 2034, it is expected that payments will be reduced by 24% unless improvements are made to the program’s balance sheet.
Many politicians have proposed solutions to address the future of this vital program. In fact, as R. Bruce Josten, Executive Vice President of Government Affairs US Chamber of Commerce, stated:
“The biggest threat imaginable to Medicare or Social Security, as we know them, will be if we do nothing at all. To do nothing will set into motion the most harsh, extreme, and burdensome entitlement changes of them all. The massive benefit cuts and tax hikes that would have to be imposed when the programs’ funding just flat runs out. The challenge for political leaders, stakeholders, and citizens is to settle on the right menu of options and to find the right mix of adjustments on payouts and pay-ins. That is what’s necessary to preserve the programs for future generations and keep our commitments to program recipients.”
Social Security Reform Options
There are many reform options available to protect Social Security and make it self-sustaining, including adjustments in:
- funding
- benefits
- eligibility
- coverage options
- in addition to improvements to administration and overhead
The American people can still work towards large savings, while having little impact on beneficiaries. It is even possible to exempt current or upcoming beneficiaries from any new changes, while still addressing the funding shortfalls.
What Is The Best Solution?
There is much confusion and discussion over the best solution, but there is no doubt that something must be done. Perhaps the most eloquent and comprehensive summation was described by Josten in his June 2013 address to the US Chamber of Commerce.
“We have nothing to fear from carefully crafted, phased-in adjustments to our entitlement programs. For example, automatic cost-of-living increases did not even exist in Social Security until 1972. A gradual increase in the retirement age was enacted in 1983. [It] is being given 44 years to fully take effect. Strengthening and improving entitlements in the face of compelling financial and demographic realities are reasonable and achievable.
We can reform entitlements without baseline cuts and without breaking our commitment to the nation’s seniors, people with disabilities, and the poor. No one in our mainstream political system today is talking about actually cutting the amount of money spent on entitlement programs. We have discussed ways to restrain the increases and make the programs sustainable…what we must do is slow the explosive rate of growth before it drives the nation into insolvency, squeezes out funding for every other important national priority, or forces massive tax hikes or benefit cuts on the American people”