Pandemic deepens financial insecurity of Social Security
Benefit cuts are only about a decade away unless Congress steps in.
WASHINGTON (Gray DC) - Social security is in financial trouble and Coronavirus is making a bad situation worse. Congress isn’t exactly poised to act.
Social security isn’t pulling in enough money to cover what it owes to retirees and those on disability. Its trust fund is making up the difference for now.
Asked if the program is in jeopardy, Research Analyst Nicko Gladstone with the Bipartisan Policy Center said, “absolutely.”
Numbers crunched by Gladstone and his peers suggest Social Security may only have 10 years before it’s forced to write smaller checks. He said hours and jobs lost to the pandemic means less money coming in; meanwhile lighter wallets lead more Americans to dip into their benefits earlier than planned.
“We don’t know how severely this will impact the finances of the program,” Gladstone said, “but we know that it will cause quite a hit.”
President Donald Trump raised eyebrows on both sides of the aisle by demanding a temporary cut to social security’s biggest funding source – the payroll tax -- before backing down Thursday. He argued it would help float companies and those who are employed. But, it also would have deepened Social Security’s financial hole.
Following the president’s pivot, leading House Democrats began warning that the Senate might create a new commission – with the power to cut Social Security benefits – into the coronavirus relief bill.
The pandemic isn’t the driving factor behind the budget crunch. It’s demographics.
Americans are living longer lives than when the program began in the 1930′s. And, with baby-boomers retiring, there are not enough workers in younger generations to cover their benefits – at least under the current tax structure.
The country’s longest-serving Senator says Congress must find a bi-partisan solution to keep the program viable, though he’s not endorsing a specific plan just yet. “I don’t have the perfect answer,” said Sen. Patrick Leahy (D-VT).
Leahy said addressing a similar challenge in the 80′s required Congress take a collective gulp and make tough choices. He said collecting more taxes or raising the retirement age need to be considered to address the current challenge.
Max Richtman, the president of the National Committee to Preserve Social Security and Medicare, said the latter is a non-starter. “Living longer does not mean you can work longer,” he said.
Richtman said not every job is doable for those 67 and older, and other may not be able to find work even if they want to stay in the labor force. He backs a bill that would increase taxes on those making $400,000 and more in wages a year. That, he says, would make the program sustainable for another 80 years.
While there is consensus on Capitol Hill that a fix must ultimately be found, there’s not much hope of that roadmap getting drawn before this Congress wraps up its work at the end of December.
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