U.S. Congressman Paul Ryan Serving Wisconsin's 1st District

U.S. Congressman Paul Ryan Serving Wisconsin's 1st District

U.S. House of Representatives

Social Security

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Social Security provides vital financial support for more than 56 million beneficiaries. Social Security also provides critical benefits to widows and those with disabilities. With 10,000 “Baby Boomers” turning 65 every day, it is essential that we work to preserve the programs these seniors have come to count on.  As Chairman House Budget Committee, one of my top priorities is to preserve the Social Security safety net and make sure the program remains solvent for future generations.

Social Security is Going Broke

Social Security is funded by the payroll taxes of current workers to pay the benefits of current retirees. Projected long run program costs are not sustainable under current program parameters. The Social Security Trustees project that the cash flow deficits that began in 2010 will continue permanently.  That means that to pay full Social Security benefits, the government must cut spending, raise taxes, or borrow more money to finance pension payments. 

A central factor in the looming financial crunch is the fact that our society is aging.  The “Baby Boom” generation has already started to collect their Social Security retirement benefits. As a result, there are fewer workers to support each retiree than when Social Security was created. Increasing life expectancy and the approaching retirement of more Baby Boomers continues to put increasing pressure on Social Security each year. Over the next several years, the number of retirees is expected to grow more rapidly than the number of individuals whose taxes will pay for future retirees’ benefits. Because of this, the number of workers supporting each Social Security recipient is projected to fall. 

The Need for Reform

According to the most recent Social Security Trustees Report, beneficiaries will face a painful 23 percent benefit cut in 2033 when the Trust Funds are exhausted.  At that time, even those who are currently on Social Security, may experience indiscriminate cuts in benefits at a time when they are increasingly reliant on the program. 

The Fiscal Year 2014 Budget, The Path to Prosperity

In the 20th century, the federal government forged a social contract with working families. At the end of their careers, the government would provide health and income security in their retirement. In the 21st century, that contract is in jeopardy. Rising health-care costs and an aging population threaten to bankrupt two crucial programs: Medicare and Social Security.

The failure of politicians in Washington to be honest about Medicare and Social Security is putting the health and retirement security of all Americans at risk. The fact is that Medicare and Social Security are in dire need of reform. With both programs weighed down by tens of trillions of dollars of unfunded liabilities, the federal government is making promises to current workers about their health and retirement security for which it has no means to pay. Without reform, these empty promises will soon become broken promises.  Both parties must work together to chart a path forward on common sense reforms, and the House-passed budget provides the nation’s leaders with the tools to get there.

Previous proposals put forward by leading reformers offer guidance on where bipartisan consensus can be reached on strengthening Social Security. For example, the President’s Fiscal Commission advanced solutions to ensure the solvency of Social Security.

The Commission suggested a more progressive benefit structure, with benefits for higher-income workers growing more slowly than those of low-income workers who are more vulnerable to economic shocks in retirement. It also recommended reforms that take account of increases in longevity to arrest the demographic problems that are undermining Social Security’s finances.

In addition, there is a bipartisan consensus that Social Security reform should provide more help to those who fall below the poverty line after retirement. As part of a plan to strengthen the safety of the nation’s most vulnerable citizens, lower-income seniors should receive more targeted assistance than those who have had ample opportunity to save for retirement.

Although certain details of the Commission’s Social Security proposals are of debatable merit, the Commission undoubtedly took several steps forward on bipartisan solutions to strengthen Social Security. This budget builds upon the Commission’s work, forcing action to solve this problem by requiring the President and Congress to work together to advance solutions.

People are living longer. The baby boomers have begun to retire. Health-care costs are skyrocketing. These are the facts, and they require a better approach to renew the social contract. This budget fulfills the mission of health and retirement security for all Americans by saving and strengthening existing programs through common-sense reforms. The solutions are clear; what remains in question is whether elected leaders have the resolve to save these programs.

Social Security Cost of Living Adjustment

On October 30, 2013, the Social Security Administration announced that a new Cost-of-Living-Adjustment (COLA) increase will be effective for Social Security checks issued beginning in January 2014. The Social Security Act provides that the COLA increase automatically each year, provided that there is an increase in inflation, as measured by the Consumer Price Index (CPI). The 1.5 percent increase will begin in 2014.

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