Social Security is a vital program for tens of millions of people. Unfortunately, the program is on a fiscally irresponsible path towards insolvency by as soon as 2034. There is not enough discussion among policymakers to bring this program back to its solvency. Instead, discussion perpetuates many myths about the program. Yesterday, CRFB released a new report on the “Nine Social Security Myths You Shouldn’t Believe,” which aims to provoke conversation about the truths of Social Security.
The 9 myths are:
- Myth #1: We don’t need to worry about Social Security for many years.
- Myth #2: Social Security faces only a small funding shortfall.
- Myth #3: Social Security solvency can be achieved solely by making the rich pay the same as everyone else.
- Myth #4: Today’s workers will not receive Social Security benefits.
- Myth #5: Social Security would be fine if we hadn’t “raided the trust fund.”
- Myth #6: Social Security cannot run a deficit.
- Myth #7: Social Security has nothing to do with the rest of the budget.
- Myth #8: Social Security can be saved by ending waste, fraud, and abuse.
- Myth #9: Raising the retirement age hits low-income seniors the hardest.
On Wednesday, April 6, the McCrery-Pomeroy SSDI Solutions Initiative released its final recommendations and book of policy proposals dedicated to improving the Social Security Disability Insurance (SSDI) program. The book, SSDI Solutions: Ideas to Strengthen the Social Security Disability Insurance Program, represents the culmination of a nearly two-year effort to foster discussion on ways to improve the SSDI program for its beneficiaries as well as those who pay into the program and the economy as a whole.
A video of the event can be found below as well as a detailed recap:
Voters say they want a candidate that “tells them like it is,” but as Social Security Trustee Charles Blahous describes, that may mean facing difficult realities about Social Security. In just six years, the Social Security Disability Trust Fund is expected to become exhausted, triggering benefit cuts if no action is taken. Also, the larger Social Security Old Age trust fund is scheduled for insolvency within 15 to 20 years.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget and head of the Campaign to Fix the Debt, wrote a commentary that appeared in the Wall Street Journal Washington Wire. It is reposted here.
As the 2016 Presidential primary season rolls on, CRFB continues to fact check the candidates on budget-related statements made during the campaign on our Fiscal FactCheck site. Within the past month, we have fact checked four statements, all related to federal spending. Below is a summary of each of them.
At the February 13 Republican presidential debate in South Carolina, Donald Trump stated that he would make Social Security solvent by reducing waste, fraud, and abuse in the program, citing thousands of 106-year-olds on the program who likely do not exist. We noted that only a tiny fraction of Social Security beneficiaries were found to be deceased and only 13 Social Security beneficiaries were over age 112. Even eliminating all improper payments would save just a small fraction of what would be needed to ensure solvency. Thus, we found that Mr. Trump's statement was false.
Our Rating: False
Senators James Lankford (R-OK) and Joe Manchin (D-WV) sent a letter Thursday to Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) pushing for sustained momentum on addressing improvements to the Social Security Disability Insurance (SSDI) program.
Despite the postponement of the SSDI trust fund’s exhaustion until 2022 by the payroll tax reallocation contained in the Bipartisan Budget Act (BBA) of 2015, more is needed to be done in order to achieve long-term program sustainability. Lankford and Manchin commended the BBA’s small SSDI reforms while urging the Finance Committee to continue working further on options that will improve the program’s solvency. Quoting the 2015 Social Security Trustees’ report, they note:
The 2015 Social Security Trustees report recommended “Any necessary resource reallocation that does occur should not be regarded as a substitute for action to sustain the finances of DI and Social Security as a whole, nor enacted in a manner that has the effect of further postponing those required corrections.” Although the Act temporarily extended the solvency of the SSDI program and included some small improvements to the program, it did little to improve the program’s long-term finances or to improve the structure of the SSDI program for beneficiaries and taxpayers. We hope you agree that more substantial reforms are needed.
The deficit will grow from less than $550 billion in 2016 to $1.4 trillion in 2026, according to this week's report by the Congressional Budget Office (CBO), driven by a $2.5 trillion rise in spending that is only partially offset by a $1.7 trillion revenue increase. And according to CBO, nearly three-quarters of that spending increase comes from just three items – Social Security, Medicare, and interest on the debt.
CBO projects that Social Security spending will increase by about $700 billion over the next 10 years, while Medicare spending will increase by about $500 billion over the same period. These two programs account for 50 percent of the spending increase. Meanwhile, interest spending will rise nearly $600 billion over the decade – accounting for another quarter of the spending increase.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget and head of the Campaign to Fix the Debt, was interviewed by the George W. Bush Institute and appeared in The Catalyst. It is reposted here.
Social Security, Medicare, and other entitlement programs face an uncertain future as the funds that run the programs dwindle. Strong leadership will be needed to save these programs.
We asked Maya MacGuineas, president of the Committee for a Responsible Federal Budget and head of Campaign to Fix the Debt, these questions about one of America’s most pressing domestic challenges: reforming entitlement programs.
MacGuineas has spent a large part of her professional career working on budget issues, advising members of both parties on tax and spending policies. As she makes it clear, modernizing these programs starts with strong leadership.
As it often does in December, CBO has released its detailed long-term projections for Social Security that build off the ones released with their long-term outlook in June. The projections generally show a worse picture for the trust fund and the 75-year shortfall than the Social Security Trustees expect. Notably, these are the first estimates since the Bipartisan Budget Act reallocated revenue to Social Security Disability Insurance (SSDI) and extended that trust fund's solvency through Fiscal Year (FY) 2021.
The combined Social Security trust fund is projected to be exhausted in 2029, five years earlier than the Trustees expect. At that point, benefits would be cut across-the-board by 29 percent to bring spending in line with revenue. The 2029 date is the median outcome of a range of possibilities, with CBO estimating a 10 percent chance that the trust fund is exhausted by 2026 and a 99 percent chance that it runs out by 2040.
The SSDI trust fund is projected to be exhausted by FY 2021, at which point benefits would be cut by 21 percent. If lawmakers reallocate revenue from the old-age program to extend SSDI solvency, it would bring forward the old-age program's insolvency date from 2030 to 2029. Notably, the SSDI reallocation that lawmakers undertook in the budget deal appears to have moved the old-age insolvency date from 2031 to 2030, since 2031 was the date CBO projected back in June.
During last week's debate on the Bipartisan Budget Act of 2015, Sen. James Lankford (R-OK) offered up an amendment making many further changes to the Social Security Disability Insurance (SSDI) program beyond the ones already included in the law.
Sen. Lankford's amendment contained a number of well-known ideas for improving the program, including some presented by the McCrery-Pomeroy SSDI Solutions Initiative.