Sanders Statement on Social Security Trust Fund Report

BURLIGTON, Vt., May 31 – U.S. Sen. Bernie Sanders (I-Vt.), a Senate Budget Committee member and founder of the Defending Social Security Caucus, issued the following statement after Social Security trustees today released their annual report on the retirement system’s finances:

“The report from the Social Security trustees confirms what many of us have known, that Social Security is not ‘going broke,’ that it can pay every benefit owed to every eligible American for the next 20 years and that after 2033 there is enough in reserve to pay three-quarters of future benefits.

“Our job now is to make sure Social Security is strong not just for 20 years but for generations to come. The best way to do that is not to cut Social Security cost-of-living adjustments as Republicans and President Obama have proposed, but to do what Obama called for as a candidate in 2008. We must lift the cap on Social Security payroll taxes and make the wealthy contribute the same percentage of their income as other workers. Today, someone making $10 million a year contributes the same amount of money as someone making $113,700. That is absurd.”

To read a fact sheet on the Keeping Our Social Security Promises Act (S.500) to apply the payroll tax that most Americans already pay on all of their income to income above $250,000 a year, click here.

To read the bill cosponsored by Senate Majority Leader Harry Reid (D-Nev.) click here.

Contact: Michael Briggs (202) 224-5141

Comments | 4

  • Trust Fund Depletions

    Sanders statement “The report from the Social Security trustees confirms what many of us have known, that Social Security is not ‘going broke,’ that it can pay every benefit owed to every eligible American for the next 20 years and that after 2033 there is enough in reserve to pay three-quarters of future benefits. Our job now is to make sure Social Security is strong not just for 20 years but for generations to come.”

    I doubt that most people think social security is going broke and certainly not in the way it was with public perception during the 1983 Social Security Reform Act (sometimes called “deal.”)

    Let’s add some background information to what is currently going on and then I’ll quote from Paul Light’s article from 2005.

    Part of the problem is the complexity of the issue. Many people go blank when financial figures are discussed so it’s difficult to create a cogent grassroots understanding of what is really going on. The basis of the financials behind this involves “trust funds” and therein lay the foundation of the problem. Currently, the following two links can help with understanding, which I have extracted from: The first is a CSM article, followed by extracts from the Social Security’s Trustee report:

    http://news.yahoo.com/social-security-medicare-time-running-fix-them-trustees-215813350.html

    (By David T. Cook | Christian Science Monitor – Fri, May 31, 2013) The political and financial stakes are huge in attempting to address Social Security’s and Medicare’s financial woes. Some 58 million Americans currently receive Social Security benefits, the Associated Press says. And as Acting Labor Secretary Seth Harris said at Friday’s briefing, many employers have stopped paying pensions where the benefits are set in advance.
    “This is not your grandfather’s retirement,” he said, making Social Security and Medicare even more important to seniors.
    The public trustees warned that “each passing year of legislative inaction reduces the likelihood that a solution can be found that is acceptable to lawmakers on both sides of the political aisle.” Waiting until 2033, when the retirement trust fund runs out, would require huge cuts in benefits to keep the system solvent.
    Benefits would have to be cut 23 percent across the board – including those already being received by retirees. If an effort was made to confine the cuts to those newly eligible for retirement but not those already getting benefits, “even wiping out 100 percent of their benefits would be insufficient” to close the system’s funding gap, Blahous said.

    http://www.ssa.gov/oact/trsum/

    Year trust funds are depleted:
    (OASI) Old-Age and Survivors Insurance = 2035
    (DI) Social Security’s Disability Insurance = 2016
    (OASDI) Old-Age and Survivors Insurance and Disability Insurance = 2033
    (HI) Medicare Hospital Insurance Trust Fund = 2026

    SUMMARY:
    Projected long-range costs for both Medicare and Social Security are not sustainable with currently scheduled financing and will require legislative action to avoid disruptive consequences for beneficiaries and taxpayers. If lawmakers act sooner rather than later, they can consider more options and more time will be available to phase in the changes, giving the public adequate time to prepare. Earlier action would also provide more opportunity to ameliorate any adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits.

    Social Security’s long-term income shortfall is now larger than it has been at any point since before the landmark program reforms of 1983. The dates of projected depletion of each of its trust funds are unchanged from last year’s report. It is important to grasp that the amount of time remaining to enact a financing solution that is both reasonably balanced and politically plausible is far less than the amount of time projected before final depletion of Social Security’s combined trust funds. Toward that end, this year’s report contains new illustrations of the magnitudes of benefit changes required if lawmakers wish to preserve solvency without affecting current beneficiaries. Importantly, even if a Social Security solution were enacted today and effective immediately, it would require financing corrections that are substantially more severe than those enacted in the 1983 program amendments.

    Both the Social Security and Medicare programs face substantial financing shortfalls that require legislative corrections, but the implications are different for each one. Of the two programs, Social Security faces the larger actuarial imbalance as well as the most immediate threat of trust fund depletion, again projected in 2016 for its Disability Insurance (DI) Trust Fund. Accordingly, more far-reaching legislative measures are required to maintain the solvency of Social Security relative to Medicare. The legislative measures required to maintain Medicare solvency are not as pronounced as they are for Social Security, but Medicare still requires substantial further reforms if it is not to eventually subject the general budget to severe levels of strain.

    SOCIAL SECURITY:
    Each year the Trustees of the Social Security and Medicare trust funds report on the current and projected financial status of the two programs. This message summarizes the 2013 Annual Reports.
    Neither Medicare nor Social Security can sustain projected long-run programs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers. If lawmakers take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits.

    SOCIAL SECURITY DISABILITY INSURANCE:
    Social Security’s Disability Insurance (DI) program satisfies neither the Trustees’ long-range test of close actuarial balance nor their short-range test of financial adequacy and faces the most immediate financing shortfall of any of the separate trust funds. DI Trust Fund reserves expressed as a percent of annual cost (the trust fund ratio) declined to 85 percent at the beginning of 2013, and the Trustees project trust fund depletion in 2016, the same year projected in the last Trustees Report. DI cost has exceeded non-interest income since 2005, and the trust fund ratio has declined since peaking in 2003. While legislation is needed to address all of Social Security’s financial imbalances, the need has become most urgent with respect to the program’s DI component. Lawmakers need to act soon to avoid reduced payments to DI beneficiaries three years from now.

    MEDICARE:
    The Trustees project that the Medicare Hospital Insurance (HI) Trust Fund will be the next to face depletion after the DI Trust Fund. The projected date of HI Trust Fund depletion is 2026, two years later than projected in last year’s report, at which time dedicated revenues would be sufficient to pay 87 percent of HI cost. The Trustees project that the share of HI cost that can be financed with HI dedicated revenues will decline slowly to 71 percent in 2047, and then rise slowly until it reaches 73 percent in 2087. As it has since 2008, the HI Trust Fund will pay out more in hospital benefits and other expenditures than it receives in income in all years until reserve depletion.

  • 2013 - The key is deciding just how urgent the problem is

    (By: Paul C. Light, Nonresident Senior Fellow, Governance Studies, Brookings, and director of Governmental Studies at Brookings from 1999 to 2004) The $168 billion package (Social Security Reform Act of 1983) eased the program through a turbulent period, and 1983 marks the last time Congress cut Social Security benefits, raised taxes and lived to tell about it. Before drawing too much inspiration from this history, however, we should recognize that this rescue was anything but assured when Mr. Conable and the other members of the bipartisan National Commission on Social Security Reform began work under the leadership of Alan Greenspan in February 1982.

    Then as now, a president was ready to invest his political capital in Social Security reform. Despite his best efforts to convince the public that Social Security was going broke, Ronald Reagan got exactly nowhere. In May 1981 his budget director, David Stockman, proposed a deep cut in the early-retirement benefit available at age 62; in July there was the suggested elimination of the $122-a-month minimum benefit for the poorest beneficiaries; and in September word leaked out that Mr. Reagan was considering a three-month freeze in the annual cost-of-living increase.
    With his public approval sagging under opposition to all these proposals, Mr. Reagan did what any beleaguered president would do: he pulled his foot off the third rail of the political subway and proposed a bipartisan national commission to study the issue. Scheduled to report by January 1983, after the midterm elections, the 15-member commission would, with luck, give the president time to recover before the 1984 campaign.

    Then as now, there was little agreement that the program was actually broken. Republicans used worst-case economic assumptions to paint the most draconian future imaginable – and then best-case assumptions to sell their solutions. Democrats, in turn, used their own projections to minimize the Social Security problem, and the worst-case numbers to illustrate the impact of any benefit cuts.

    Then as now, there was intense conflict on how to fix the program. As expected, Republicans said the best way to rescue Social Security was to reduce benefits, while Democrats sought to give the program breathing room by raising taxes.

    Finally, then as now, Republicans worried about how Social Security would affect the midterm elections. Their concern was justified. With Social Security as the centerpiece of their “It’s not fair … It’s Republican” advertising campaign, Democrats added 26 seats to their already substantial majority in 1982.

    So much for the parallels between then and now. The 1983 rescue was rooted in four conditions that do not currently prevail.
    First, there was a real and pressing deadline for action in 1983 that simply does not exist today. Without action by March or April 1983, the Social Security trust fund would have started to run a slight deficit by midsummer. Social Security would not have literally gone bankrupt, but there would have been a slight disruption in check processing until the needed revenue dribbled in.

    Second, both sides in the 1983 debate eventually agreed on a single estimate of the size of the problem – a consensus that seems well out of reach today. “Everyone is entitled to their own opinions,” Senator Daniel Patrick Moynihan told his fellow commissioners as they set the targets for compromise only days after the 1982 midterm elections. “But not to their own facts.”

    Third, negotiators had the political cover to form a consensus that would be hard to build in today’s 24-hour news cycle. Although the commission is often credited for the 1983 Social Security rescue, the hard bargaining was done by a secret “gang of nine” that met irregularly during the first two weeks of January at the Foxhall Road home of James Baker, then the White House chief of staff. The members reached a final agreement one early afternoon in January 1983, then watched the Redskins defeat the Vikings in the N.F.L. playoffs as they waited for final approvals from the president and speaker of the House.

    Fourth, both sides agreed to mutual sacrifice, a concept that has yet to surface in the current conversation. Democrats accepted a six-month delay in the annual cost-of-living adjustment and the increase in the retirement age, while Republicans accepted a faster-than-planned rise in payroll taxes and a substantial tax increase on the self-employed. The two sides closed the deal by subjecting up to half of Social Security benefits to income taxes for higher-income beneficiaries, a provision that allowed Democrats to say Republicans had passed a tax increase and Republicans to say Democrats had agreed to a benefit cut.

    This agreement was rooted in a common willingness to solve the problem regardless of the political consequences. Republicans gave up their effort to reduce the public’s dependency on Social Security, while Democrats gave up the one campaign issue that might have slowed Mr. Reagan’s easy run to re-election in 1984.

    It is hard to imagine how a similar package could emerge from today’s highly polarized process. Yet, as the 1983 rescue showed, Congress and presidents can take action when they are forced into up-or-down votes on urgent problems. The key is deciding just how urgent a problem is.

      • newamerian.com—web site for Birch Society

        The newamerican.com is the web site for the John Birch Society.

        The John Birch Society would by it’s very nature be quite opposed to Sanders and his take on just about everything. Ultra-conservative, ultra-anti-any sort of social program including civil rights and rabidly scared of communism, the Birchers idea of a new america is not a pretty one. And the Birchers have a long record of stretching the truth. Fred C Koch, father of the Koch brothers, today’s ultra-conservative multi=wealthy investors, was a founder of the John Birch Society. The Koch brothers have continued the family tradition by quietly lending the financial backing and creating the “Tea Party” under the guise of a grassroots organization.

        Anything the newamerican has to say about Bernie Sanders or the social security program is bogus.

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