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An Open Letter to the United States Congress: Support Legislation to Strengthen Social Security!
May 9, 2011
Dear Member of Congress:
On behalf of the 362,000 members of the National Taxpayers Union (NTU), I urge you to support S. 804, the Social Security Solvency and Sustainability Act. Introduced by Senator Lindsey Graham (R-SC), this bill would eliminate the shortfall in the Social Security system, thereby maintaining its ability to serve future generations of retirees without raising taxes
Social Security’s finances are becoming increasingly tenuous. This year the program is projected to collect $45 billion less in payroll taxes than it will pay out in benefits. According to the Congressional Budget Office, annual deficits will continue to grow until the program’s deceptively-named “Trust Fund” is exhausted around 2037. All told, the Trustees for Social Security calculate that over the next 75 years the program will have an unfunded liability of $5.4 trillion. Without prudent changes to the program now, reconciling that liability will entail ruinous debt, punitive taxes, or sharp benefit reductions in the future.
By gradually raising the retirement age, and introducing progressive price indexing to the benefit formula, this bill is able to make Social Security solvent and sustainable without resorting to higher taxes. Although Congress has altered its New Deal-era provisions through the years, Social Security has nonetheless failed to keep up with the rapidly changing demographics and economics of modern society. Since the program first began paying regular benefits, the average lifespan of recipients has increased by about 15 years, whereas the age at which you can collect benefits will be raised only 2 years, to 67, by 2027. S. 804 would begin to address that lag through gradually increasing the retirement age to 70 by 2032. Furthermore, the bill ensures that America won’t find itself in a similar problem down the road by indexing the retirement age to increases or decreases in life expectancy.
The “Social Security Solvency and Sustainability Act” also addresses a flaw in the benefit calculation that threatens future retirees’ ability to rely on the program. Social Security uses a formula that links a retiree’s benefit payment to increases in the wage index. But since wages grow faster than prices, successive generations receive greater benefits than those paid to earlier retirees. As a remedy to this solvency problem, S. 804 introduces progressive price indexing that maintains the wage-based formula for any income up to $43,000, with further benefits based on price-growth. Such a change would return the system closer to the expected benefit levels put in place prior to 1972.
NTU has long argued that any Social Security reform should increase freedom, create ownership of retirement assets, and terminate long-term unfunded liabilities. Although our ideal plan would empower individuals with more options for private personal retirement accounts, this bill takes necessary steps toward overhauling a program whose financial woes are already contributing to our deficit. NTU applauds the introduction of the “Social Security Solvency and Sustainability Act” and we encourage all Members of Congress to work toward passage of S. 804.Sincerely, Brandon Greife Federal Government Affairs Manager