Americans have grown increasingly reliant on Social Security for their retirement income, according to a new report from the left-leaning Institute for Women’s Policy Research. Between 1999 and 2009 the number of people 65 and older who count on Social Security for at least 80 percent of their income has grown 48 percent for men and 26 percent for women because of job and income loss.
Meanwhile, new projections from the Congressional Budget Office show the program’s trust fund dwindling and hitting zero by 2037 as America’s baby-boomers retire and applications for benefits increase. This year, Social Security will pay out $45 billion more in retirement, disability and survivors’ benefits than it recoups in payroll taxes — a figure that almost triples when the new one-year payroll tax cut is included, CBO said. Projections for the total year balloon to $727 billion or 4.8 percent of GDP.
More than 54 million people collect retirement, disability, or survivor benefits from Social Security, but by 2021, that number will grow to 71 million people, according to CBO. Also in 2021, “CBO estimates Social Security outlays will total $1.3 trillion, or about 5.3 percent of GDP.”
Though groups from all political leanings seem to agree the Social Security system needs reforming, consensus has yet to be reached. President Obama mostly skirted the issue in his State of the Union address Tuesday, despite recommendations from his bipartisan fiscal commission to gradually raise the retirement age to 69, trim annual cost of living adjustments, and increase the amount of income subject to the Social Security payroll tax.
Organizations like the Concord Coalition say Social Security reform is critical for the sake of reducing the nation’s ballooning deficit, while groups like the Center for American Progress and the Institute for Women’s Policy Research say the most compelling reason to change the system is to modernize the program to be better-tailored to demographic and economic changes of the last two decades.
“There’s still a lot of reticence on the part of politicians to touch this issue, and frankly a lot of misunderstanding on why it’s important to act now rather than wait until 2037,” said Bob Bixby, executive director of the Concord Coalition. “We’re talking about trying to calibrate a system so that it’s sustainable over the long term. And it just seems to never get past the false debate about whether granny’s benefits are going to be cut tomorrow.”
But according to Christian Weller, a Senior Fellow at the Center for American Progress, the latest CBO projections don’t account for the revenue that Social Security will continue to collect, which by 2037 should be able to pay about 80 percent of the benefit payments.
“Social Security needs to be revamped, but it has nothing to do with the deficit and is much more about making it evolve to fit how the economy has changed around it over the past two decades, Weller said. “We need to work to make Social Security a more efficient social insurance system that people will get better bang for their buck and get more protection from, especially when we need it.”
According to Bixby, the president needs to be the one to lead the pack.
“If members of Congress know the pPresident is not going to sign a bill or give them political cover, they’re never going to take on something like this,” he said. “Maybe this is a second term issue that Obama will revisit after the election.”