Advocates for increasing Social Security’s benefits are counting on today’s release of the annual trustees report to provide some fodder for their cause.
While the yearly analysis confirmed the program’s long-term funding woes, proponents for expansion say it also proves the government can afford it.
“The numbers make it clear that the question about whether to expand or cut Social Security is a question of values, not affordability,” said Nancy Altman, president of Social Security Works and chair of the Strengthen Social Security Coalition.
The report, released this afternoon, echoed last year’s projected revenue shortfalls starting in the mid-2020s and leading to a depleted surplus by 2035. At that point, unless Congress has taken steps to shore it up, the program will be able to fund about 75 percent of benefits. By 2090, unfunded obligations would reach $ 12.5 trillion by 2091, up from $ 11.4 trillion a year ago. Longer-range estimates beyond that paint an even bleaker picture.
Medicare, meanwhile, saw at least one aspect of its finances improve slightly. The trustees project that Medicare Part A — which covers hospital stays, skilled nursing facilities and the like — will be depleted in 2029, one year later than projected a year ago. When that money runs out, dedicated revenues will be sufficient to pay 88 percent of Part A’s costs.
However, Altman points to other information in the trustees’ lengthy assessment of Social Security that often gets overshadowed.
For instance, the program isn’t expected to comprise a much larger percentage of gross domestic product in the future than it already does. The new report shows the program’s cost will equal 4.9 of GDP this year, increasing to 6.1 percent by 2037. After that it will decline to 5.9 percent by 2050 and climb back to 6.1 percent by 2091. The projected shortfall in that lengthy time frame was pegged as 0.9 percent of annual GDP in last year’s overview.
Also included in the report are solutions to prevent insolvency. This year’s assessment shows that either reducing benefits by about 17 percent or generating revenue equivalent to a 2.76 percentage-point increase in payroll taxes would restore actuarial balance.
“The public is frequently told we can’t afford it,” said Mary Johnson, Social Security policy analyst for the Senior Citizens League. “We’d like a conversation about what we can do to have a more equitable way of generating revenue.”
One point of contention is the wage tax cap. This year, workers will pony up 6.2 percent of their earnings up to $ 127,200, with employers contributing the same. This means someone who makes, say, exactly double the maximum ($ 254,400) pays into Social Security at a rate of 3.1 percent of their whole salary.
“Earners above that threshold make out better,” Altman said.
Research from the Income and Benefits Policy Center at the Urban Institute in 2015 showed that an immediate elimination of the cap would extend the life of the surplus to 2055 instead of 2034, they year the extra money then was expected to run dry.
Moreover, a survey by the Senior Citizens League shows broad support among older Americans for lifting the wage cap, with 72 percent of respondents supporting it.
Several congressional bills with Democratic backing have been introduced this year to expand benefits. However, competing issues — i.e., health care — and the ongoing partisan gridlock make the chance of action on the measures slim. President Donald Trump has said, meanwhile, that he would not make any cuts to retiree benefits. (His proposed budget, however, does include cuts to Social Security disability insurance.)
* Consumer Price Index for the Elderly (alternative way to measure cost-of-living increases)
While the program can fully fund benefits for close to another two decades, the trustees report cautions that the longer lawmakers delay taking action, the more severe the changes will need to be to restore solvency.
Romina Boccia, an economist and Social Security expert at the Heritage Foundation, said in a statement that the trustees report “demonstrates in no uncertain terms that doing nothing on Social Security is not an option.”
In general, Boccia said the reforms in a bill proposed last year by Rep. Sam Johnson, R-Texas, would be a good start toward repairing the system. Among other provisions, the measure would raise the full retirement age, phase out cost-of-living increases for higher earners and phase out taxation on benefits.
A 2015 AARP survey showed that 80 percent of respondents plan to rely on Social Security as a source of income in retirement. A third said it would be the source of income they rely on the most.
The latest federal data shows that the average monthly payment is $ 1,360.
“Congress should expand those modest benefits while ensuring that Social Security has sufficient revenue,” said Altman of Social Security Works. “The American people overwhelmingly want to see [the program] expanded, not cut.
“Lawmakers should follow their lead.”
(This story has been updated to add comment from the Heritage Foundation and data from the 2017 Social Security trustees report.)