This year’s projected shortfalls are larger than those released in 2015, owing to several factors, including lower expected interest rates and lower expected GDP growth, according to CBO.
CBO predicts that Social Security’s two trust funds will be insolvent by 2029, almost four years earlier than actuaries at the Social Security Administration are predicting.
That will mean an immediate, across-the-board 29-percent reduction in benefits for beneficiaries in 2030.
The bad news is compounded by the fact that the country’s political leadership is showing little interest in legislating the near-term reforms necessary to avert the crisis.
Within the toxic culture of the country’s political class, the mere question of Social Security reform remains radioactive.
Save Our Social Security Act
This summer, the Save Our Social Security Act was introduced by a coalition of five Republicans and one Democrat.
The U.S. Chamber of Commerce and the Committee for a Responsible Federal Budget, a non-partisan think tank, heralded the legislation as a common sense approach to reform.
It included measures both favored and abhorred by the right and the left—increasing the payroll tax threshold, increasing the retirement age, means-testing benefits for the wealthy and increasing benefits for the country’s most vulnerable.
Long considered the “third rail” of American politics—you touch Social Security you suffer certain electoral death—the politically counter-intuitive reforms advanced in the S.O.S Act amounted to an act of political courage that required none: Four of the bill’s five Republican co-sponsors who backed the law’s proposed tax increases had announced they would not seek re-election prior to co-sponsoring the bill.
Social Security Reform Act of 2016 introduced in House by “most conservative” member
In the last days of the 114th Congress, new legislation was introduced by one of the House of Representatives’ most influential lawmakers on Social Security.
The Social Security Reform Act of 2016, sponsored by Rep. Sam Johnson, R-TX, chairman of the Social Security Subcommittee of the House Committee of Ways and Means, would begin increasing the eligibility age for benefits beginning in 2023, until the retirement age reached 69 by 2030. It eliminates cost-of-living adjustments for some beneficiaries beginning in 2019.
It would also begin phasing out the taxes collected on Social Security benefits in 2045. This past November, the 85-year old Johnson, who was a POW for nearly seven years during the Vietnam War, decidedly won his 14th Congressional term. In 2011 the National Journal ranked him the most conservative member of Congress, based on his voting record.
In scoring Johnson’s bill, the Social Security Administration said it would protect Social Security’s solvency, giving the programs “the ability to pay 100 percent of scheduled benefits on a timely basis for the foreseeable future.”
The non-partisan CRFB called it a “thoughtful plan” that would ensure benefits are paid on time “and targeted to those who need them most.”
Reactions to Johnson bill range from typical to tepid
Rep. Richard Neal, D-MA, the incoming ranking member of the House Ways and Means Committee, was immediately skeptical of the Johnson’s bill.
“As Congressional Republicans prepare to dismantle Medicare and Medicaid, it now appears that Social Security has been added to the Republicans’ chopping block,” said Rep. Neal in a statement.
“Instead of honoring the promises made to our seniors, the Republican plan would amount to a massive cut in Social Security benefits for working Americans through cuts to the cost-of-living adjustment, raising the retirement age to 69 and cuts to the benefit-computation formula. Ultimately, this translates to a 30 percent or more cut in benefits for middle class retirees,” added Neal.
House minority leader Nancy Pelosi, D-CA, called Johnson’s bill “an alarming sign that Republicans are greedily eying devastating cuts to Americans’ Social Security benefits.”
Republican leaders in the House did not immediately endorse the bill. House Speaker Paul Ryan, R-WI, recently told the CBS show 60 Minutes he has no plans to change Social Security’s funding structure. A representative from his office told the Associate Press that the Speaker sees Johnson’s bill as “one of many ideas” to address Social Security’s solvency.
For his part, Johnson said the intention behind his bill was to start a “fact-based conversation” on shoring up Social Security’s finances.
“For years I've talked about the need to fix Social Security so that our children and grandchildren can count on it to be there for them just like it’s there for today’s seniors and individuals with disabilities,” said Johnson in a statement.
“I urge my colleagues to also put pen to paper and offer their ideas about how they would save Social Security for generations to come,” he added. “Americans want, need, and deserve for us to finally come up with a solution to saving this important program.”