Published in Woonsocket Call on July 16, 2017
Just days ago, a released annual federal report, the 2017 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, says the nation’s Social Security and Medicare programs continue to work, are fiscally solvent, but future fixes will be needed to maintain their long-term actuarial balance.
The Social Security Administration’s (SSA) annual snap shot of the fiscal health of Social Security and Medicare, two of the nation’s largest entitlement programs, released on July 13, is important to millions of beneficiaries. According to the federal agency, in 2017 over 62 million Americans (retired, disabled and survivors) received income from programs administered by SSA, receiving approximately $955 billion in Social Security benefits.
The Good News
The trustee’s report projects that Social Security will be financially solvent until 2034 (unchanged from last year), after which SSA can pay 77 percent of benefits if there are no changes in the program. The 269-page report also noted that the Medicare Trust Fund for hospital care has sufficient funds to cover its obligations until 2029, one year longer than projected last year, then 88 percent afterward if nothing is done to strengthen the system’s finances
The trustees report says that there is now $2.847 trillion in the Social Security Trust Fund, which is $35.2 billion more than last year — and that it will continue to grow by payroll contributions and interest on the Trust Fund’s assets.
Social Security Administration efficiently manages its entitlement program, says the trustee report. The cost of $6.2 billion to administer to program in 2016 was a very low 0.7 percent of the total agency’s expenditures.
The trustee’s project a 2.2 percent cost-of-living adjustment (COLA) for Social Security beneficiaries in 2018, the largest increase in years. In addition, Medicare Part B premiums will also remain unchanged next year. Most beneficiaries pay a monthly premium of $134 (this amount increases for those with higher incomes.)
Social Security is “Stable and Healthy for Now”
According to the National Committee to Preserve Social Security (NCPSSM), the recently released trustee’s report confirms that the federal entitlement program is “stable and healthy for now,” while acknowledging there will be future challenges if “corrective action is not taken.”
“Forty percent of seniors (and 90 percent unmarried seniors) rely on Social Security for all or most of their income. The average monthly retirement benefit of $1,355 is barely enough to meet basic needs, and the Trustees’ latest projected cost-of-living increase of 2.2 percent will not keep pace with seniors’ true expenses. Under these circumstances, any benefit cuts (including raising the retirement age to 70 as some propose) would be truly painful for our nation’s retirees,” says Max Richtman, NCPSSM’s president and CEO, in a statement responding to the release of the federal report.
“Opponents of Social Security may once again try to use this report as an excuse to cut benefits, including raising the retirement age,” warns Max Richtman. “We must, instead, look to modest and manageable solutions that will keep Social Security solvent well into the future without punishing seniors and disabled Americans,” he says.
Depending on what the final Senate health bill looks like, the legislation could reduce the solvency of Medicare by two years, say Richtman. “The National Committee opposes the GOP health plan and rejects efforts to privatize Medicare. We advocate innovation and continuing efficiencies in the delivery of care, allowing Medicare to negotiate prescription drug prices, and restoring rebates the pharmaceutical companies used to pay the federal government for drugs prescribed to “dual-eligibles” (those who qualify for both Medicare and Medicaid) – in order to keep Medicare in sound financial health,” he says.
Safeguarding and Expanding Social Security Benefits
In a statement, Richard Fiesta, Executive Director of the Washington, DC-based Alliance of Retired Americans, notes that the Trustees project that the Social Security Disability Insurance (SSDI) trust will be fully solvent until 2028, five years longer than last year’s report. “In light of this data, it makes no sense that the President’s FY 2018 budget seeks to cut Social Security Disability Insurance funding by $63 billion,” he says.
Despite the trustees’ strong report, Fiesta believes that improvements can be made that would benefit all workers and retirees. His organization supports safeguarding and expanding Social Security benefits, providing a more accurate formula for cost-of-living adjustments, and lifting the cap on earnings for the wealthiest Americans.
Fiesta adds, “reining in the prices of prescription drugs would strengthen Medicare for the future and reduce costs to retirees.”
AARP CEO Jo Ann Jenkins, in a statement, calls for bipartisan action in Congress and the Trump administration to ensure the strong fiscal health of Social Security and Medicare programs. “Social Security should remain separate from the budget. Medicare can improve if we reduce the overall cost of health care, rather than impose an age tax, and if we lower prescription costs, instead of giving tax breaks to drug and insurance companies,” she says.
Finally, in a statement, Nancy Altman, President of Social Security Works, also chairing the Strengthen Social Security Coalition, says that this year’s trustee’s report clearly indicates that the nation can fully afford an expanded Social Security. Altman says that polling continues to show that Americans support expanding the program’s benefits.
Altman believes the Social Security program can solve the nation’s “looming retirement income crisis, the increasing economic squeeze on middle-class families, and the perilous and growing income and wealth inequality.” So, when confronting these challenges, she says, “the question is not how can we afford to expand Social Security, but, rather, how can we afford not to expand it.”
Ensuring the Long-Term Solvency of Social Security
Those nearing retirement or retired will be assured existing Social Security benefits, promises the 2016 Republican Party Platform. “Of the many reforms being proposed, all options should be considered to preserve Social Security. As Republicans, we oppose tax increases and believe in the power of markets to create wealth and to help secure the future of our Social Security system,” says the Platform. Simply put, the GOP opposes the raising of payroll taxes on higher income taxpayers to stabilize or expand Social security and supports privatization, allowing Wall Street to control your Social Security benefits.
On the other hand, last year’s Democratic Party Platform opposed Social Security cuts, privatization or the weakening of the retirement program, along with GOP attempts to raise the retirement age, slash benefits by cutting cost-of-living adjustments, or reducing earned benefits. The Democratic Platform called for taxing people making above $250,000 will bring additional funding into the entitlement program.
Congressional gridlock has not blocked legislation from being introduced to fix the nation’s Social Security program. According to Social Security Works, over 20 Social Security expansion bills have been introduced in the House and Senate since 2015. Recently, the Social Security 2100 Act, introduced by Rep. John Larson (D-CT), has 162 House cosponsors —around 85 percent of all Democratic representatives. Similarly, around 90 percent of Senate Democrats are on record in favor of expanding, not cutting Social Security.
Many consider Social Security to be the “third rail of a nations politics.” Wikipedia notes that this metaphor comes from the high-voltage third rail in some electric railway systems. Stepping on it usually results in electrocution and the use of the term in the political arena refers to “political death.” With the Social Security and Medicare programs now on firm financial footing, it is now time for Congress to seriously consider legislative actions to ensure the longevity and expansion of these programs. When the dust settles after the upcoming November 2018 elections, we’ll see if Social Security is truly “a third rail.”