Stephen King wrote in his book, On Writing, “You should write what you know about.” Blogger Christian wrote that bloggers should stick with a topic and become experts people can rely on. I would never attempt to write about slavery or walking on the moon. As far as becoming an expert in one subject at my age, that’s a mountain too high to reach its peak—but I can go far enough to see the valley below.
At the onset of my research, the depth of my Social Security understanding was shallow enough a three-year-old could keep his head out of the water. Diving into economists’ different views is a deep pool and easy to drown in acronyms and regulations. So it began with something I understand well, my check shows up in my checking account each month, and I always find a way to spend it.
Social Security is one of the more contentious, hot button issues in American politics. Representing the senior population, AARP strikes back hard at any notion of cutting back. Political parties have various opinions for how to reign in the costs. Generally, Democrats and Republicans cannot agree on changes. Plain and simple explanations can be misleading, firing up our fear and worries. First, cutting Social Security doesn’t mean you will have a smaller check today or that expanding Social Security means more money for you.
Social Security was signed into law by President Roosevelt in 1935 to keep millions of people out of poverty. That was its purpose. But over time, it morphed into something we counted on for all retirement needs, so saving up for retirement—for those who could— lost some of its urgency. This is changing with young people whose expectations for Social Security are low.
The Social Security Trust Fund has been a successful program for 80-years. Without SS, the poverty rates for African Americans would more than double and many older people’s lifestyles would be downgraded.
In 1972, Congress passed an automatic Social Security COLA (Cost of Living Adjustment) based on inflation to protect seniors from the ravages of inflation. In the new 2017 tax bill, this was changed to a different measurement of the Consumer Price Index (CPI), the chain weighted CPI. The CPI is a measure of change over time in what we pay for necessary goods and services, food, clothes, housing, etc. According to Investopedia, the chain weighted CPI is a more accurate gauge for inflation that factors in substitution of goods and services with less expensive alternatives, which produces lower estimates of inflation. You buy farmed salmon instead of wild salmon. You shop at Kohl’s instead of REI. According to U.S. News, it will have a modest impact on improving the SS system’s finances. The National Committee for Preserving Social Security states, “The ‘chained CPI’ produces lower estimates of inflation.”
In 2021, Social Security will pay out more than it collects, something that has not happened since 1982. This trend is expected to get worse with each passing year. But don’t press the panic button. We will still get a check. Our children’s FICA tax provides revenue for older generations. The SS Trust Fund pays early investors with money from late investors. But like ignoring climate change, if Congress continues spinning its wheels as the Trust Fund dwindles, younger workers can expect far less than what we take for granted.
For long-term solvency, what’s on our smorgasbord of options? One idea that seems to have support on both sides of the political aisle is “Means Testing.” The Webster dictionary defines means test as “an examination into the financial state of a person to determine eligibility for public assistance.” We already have that for food stamps and Medicaid. The results of means test for Social Security—however, they define wealth—is wealthy people wouldn’t get benefits even though they paid into it. If Social Security was about distributing lemons, Eileen’s lemon tree, heavy with fruit, means no monthly box of lemons for her. Visiting her recently, she said she didn’t want any more lemons. “I have too many,” she said. “Sometimes, I go outside and toss them into the woods for the wildlife to enjoy.” Means Testing for wealthier people calls for them to share their lemons with those who don’t have a lemon tree.
Another idea is to “Eliminate the Earnings Cap.” Right now, workers pay Social Security taxes on up to $132,900 of earnings. More than 90% of all workers are paying into the program on every penny they earn. Highly paid workers are exempted on some, or perhaps a large portion, of their earned income.
Increasing the full retirement age further is another consideration. “The original Social Security Act of 1935 set the minimum age for receiving full retirement benefits at 65.” Since its beginning, life expectancy has increased seven years for both genders. According to the Social Security website, by 1990, life expectancy was 72.3 for men and 83.6 for women. A 1983 Amendment phased in a gradual increase in age for collecting benefits. “The retirement age increases from 65 to 67 over 22 years, with an 11-year hiatus at which the retirement age will remain at 66.”
Some lawmakers on Capitol Hill are trying to find a solution. We the voting public, or those of us who wish to be informed about the President’s viewpoint and where the leading 2020 presidential candidates stand can get updates from govtrack.com on bills we care about. And without leaving the website, we can communicate with our representatives and senators.
Some centrists from both sides support reforms to better account for the Trust Fund, generally by taking it “off-budget” or putting it in a “Lock Box.” (A Lock Box bill passed the House in February of 2019 but has stalled in the Senate) If Social Security was viewed as its own separate fund which cannot be used for other reasons or supplemented from the general budget, protecting the Social Security program may become more politically acceptable.