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Social Security

Social Security provides vital financial support for more than 57 million beneficiaries.  Social Security also provides critical benefits to widows and those with disabilities.  With approximately 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 Speaker of the House, one of my top priorities is to preserve the Social Security safety net and make sure the program remains solvent for future generations.

The Need for Reform: 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 the current program parameters.  The Social Security Trustees project that the cash flow deficits that began in 2010 will continue permanently.  According to the most recent Social Security Trustees Report, this means beneficiaries will face a painful 21 percent benefit cut in 2034 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.  In order to pay full Social Security benefits in the future, the government must cut spending, raise taxes, or borrow more money to finance these 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, the number of retirees has grown more rapidly than the number of employed individuals whose taxes pay for future retirees’ benefits.  There are currently fewer than three workers supporting each retiree compared to the 17 workers that supported each retiree at the time Social Security was created.

Increasing life expectancy and the approaching retirement of more Baby Boomers continues to put increasing pressure on the Social Security program.  According to a Congressional Budget Office report, the number of Americans age 65 and older is expected to increase by 39 percent by 2027, while the number of Americans ages 20 to 64 is expected to increase only 3 percent over the same period of time.  Because of this, the number of workers supporting each Social Security recipient is projected to fall.

The Bipartisan Budget Act of 2015: Impact on Current Benefits

In the 20th century, the federal government forged a social contract with working families.  At the end of their careers, the government would help to provide health and income security in their retirement.  In the 21st century, that contract is now 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 the future of 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.

H.R. 1314, the Bipartisan Budget Act of 2015, called for setting in motion the process of reforming Social Security.  The 2015 Social Security Trustees Report had projected that the Disability Insurance (DI) Trust Fund would be depleted in 2016, and this meant that disabled beneficiaries could have faced a 19 percent across-the-board cut in benefits in the fourth quarter of that year unless Congress enacted reforms.  To address this concern, the budget reallocated .57 percent of the 12.4 percent payroll tax away from the Social Security retirement program and to the DI program each year of the 2016 – 2018 period.  According to the Ways and Means Committee, this would make the DI program solvent until 2022, and when combined with other reforms in the bill, would not shorten the life of the retirement program. 

Included in H.R. 1314 was a provision which allowed the Social Security Administration (SSA) to undertake more rigorous evaluations when a beneficiary asks for a waiver of an overpayment adjustment, which may occur when the beneficiary claims they are without fault and are unable to repay.  The bill also required the SSA to establish cooperative disability investigations (CDI) units in every state, which investigate DI claims and help uncover and prevent fraud.  It prohibited the inclusion of medical evidence from unlicensed individuals or doctors convicted of fraud in determinations of disability claims and increased criminal penalties for Social Security fraud.  In an effort to promote opportunities for disability beneficiaries, this budget agreement required the SSA to establish a new demonstration project that would allow beneficiaries to work while avoiding a “cash cliff.”  H.R. 1314 removed reporting burdens on working beneficiaries by enabling the SSA to obtain earnings information about beneficiaries from payroll providers with the beneficiary’s consent.  It also allowed beneficiaries who self-report earnings to do so electronically.  Recognizing the need to save Social Security, this budget offered a step in that direction.

Social Security Cost of Living Adjustment

To compensate for the effects of inflation as measured by the Consumer Price Index (CPI), Social Security recipients may receive a Cost-of-Living-Adjustment (COLA) in their checks beginning in January of each year.  On October 13, 2017, the Social Security Administration announced that there will be a 2.0 percent increase for 2018.  I will continue to work with my colleagues to ensure that Congress does more to encourage economic growth and bolster savings.

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