Trustees for the Social Security Trust Fund report today that the program can pay full benefits through 2033 — three years less than projected in 2011, due primarily to the continuing high unemployment rate. As usual, we can count on Wall Street interests and the politicians carrying their water to proclaim that Social Security is going bankrupt. That’s plain wrong. Social Security has an accumulated surplus of more than $2.7 trillion and can pay 100 percent of benefits for the next several decades.
NOW suggests that with a number of modest adjustments to Social Security’s financing, we can improve benefits and ensure adequate funds far into the future. Improvements are especially important for older women, who are poorer and face higher expenses in retirement.
It is especially troubling to hear Wall Street demanding further steps that would dismantle the program. Remember, these are the very folks who drove the U.S. economy off a cliff in 2007, resulting in the main stress on Social Security’s finances — unemployment. The system’s revenues have been reduced in recent years due to high unemployment; fewer people working means fewer workers paying into the system. This is nothing new. In fact, this situation has occurred 18 times since 1958 — whenever a recession has shed thousands of jobs.
As the economy improves and more people find employment, Social Security revenue will increase, allowing the trust fund balance to continue to grow. Safeguarding Social Security’s financing is all the more reason for lawmakers to endorse projects that get people back to work and stimulate what is now a sluggish economic recovery.
Unfortunately, conservatives in Congress have stood in the way of any major job stimulus effort. These are the same conservative politicians who have tried time and again to cut Social Security benefits or to privatize this highly successful social insurance program, risking nearly everyone’s retirement in the hands of Wall Street gamblers.
It is critically important to fine tune the program to ensure that Social Security retirement, disability and survivor benefits can be paid over the long term — 75 years or more. Women, especially, need to know that adequate benefits will be available when they need them, as older women have fewer savings, often no pension income, and more out-of-pocket health care expenses. Sex-based pay discrimination and time out of the paid workforce to care for family undermine women’s old-age economic security.
Addressing the facts about older women’s economic insecurity, the National Organization for Women and a large group of allied organizations are working on proposals to improve Social Security’s long-term solvency and to modernize its benefit structure. Here’s what we would like to see: modestly improved benefits for everyone, increased survivor benefits, credits for caregiving years taken out of the paid workforce, an increased special minimum for lifetime low-income earners, changing the Cost of Living (COLA) formula to one that is based on the Consumer Price Index for the elderly (CPI-E), restoration of student benefits, requiring equal benefits for same-sex married couples and partners, and improvements that address the needs of people with disabilities.
To achieve these improvements, modest adjustments will have to be made to Social Security’s financing structure, beginning with lifting the cap on wages subject to the payroll tax. Right now, workers who earn $50,000 contribute 6.2 percent of their income through the payroll tax, while people who make $500,000 per year pay only about 1 percent. Lifting or removing the cap (currently $110,100) would eliminate the entire projected shortfall far into the future. Additionally, slowly increasing the Social Security contribution rate by 1/40th of one percent over 20 years for both employers and employees would help, as would lowering the unemployment rate and raising the minimum wage.
These are changes that should be made to properly prepare for the retirement of 76 million baby boomers and successive generations. NOW calls on policy makers to take up modernization of Social Security, improving — not cutting — benefits, and planning for long-term financial security of the program.