Seventy seven years ago today, the Social Security Act was signed into law. Over the life of the program, it has provided generations of Americans support and security once they reach retirement or if they are disabled. Unfortunately, no matter how you look at it, Social Security is now in dire need of reform. Every year, the Social Security Trustees warn us that changes need to be implemented as soon as possible in order to keep the program solvent. This year’s estimates were more gloomy than ever – the program faces an actuarial imbalance of 0.96 percent of GDP (2.67 percent of payroll) over 75 years and a deficit of 1.54 percent of GDP (4.5 percent of payroll) in the 75th year. By 2033 -- or just 21 more years -- the Social Security trust funds will be exhausted, at which point recipients will see an immediate and across-the-board 25 percent cut in benefits.
While 2033 may seem far enough away to work out a viable solution, the Social Security Disability Insurance (DI) program faces insolvency in just four years. That means that by 2016, disability benefits will have to be cut by more than 20 percent if we don't make changes in advance. In an op-ed earlier this year, CRFB’s Senior Policy Director Marc Goldwein put forth several short-term solutions to fix the broken DI program and urged lawmakers to take advantage of this fast-approaching deadline to reform Social Security as a whole.
In order to preserve Social Security for future generations of Americans, lawmakers will either need to enact reforms that raise taxes, reduce initial benefits (through further increases in the retirement ages or by some other means), and/or slow the growth of benefits. The sooner they act the better because beneficiaries need time to adjust to changes. We have discussed various ideas on ways to reform Social Security before, and hope this year’s anniversary serves as another reminder to take the necessary steps towards reform. By addressing this issue head on now, lawmakers can implement changes in a bipartisan and thoughtful way to protect those who depend on the program the most.
Let’s give Social Security a real reason to celebrate this year, and make reforming the program a priority before it’s too late.