Social Security at Risk

At a recent press conference, President McEntee tells the new fiscal commission that Social Security shouldn't be part of the debate on deficit reduction. AFSCME is a leader in the new national Campaign to strengthen Social Security.

At a recent press conference, President McEntee tells the new fiscal commission that Social Security shouldn't be part of the debate on deficit reduction. AFSCME is a leader in the new national Campaign to strengthen Social Security, which recently sponsored dozens of events round the country to mark the program's 75th birthday.

Photo Credit:

Luis Gomez

By Jon Melegrito

On August 14, Americans across the country marked 75 years since the signing of the Social Security Act — landmark legislation that has provided economic security and peace of mind for generations of American families. Social Security has been this country’s most trusted institution, the most dependable source of income for retirees and people with disabilities. And it has paid for itself — through payroll contributions of hardworking Americans. It does not add a penny to the federal deficit. In fact, Social Security has a $2.5 trillion surplus, which, along with payroll contributions, is enough to pay full benefits for the next 30 years. After that, payroll contributions will continue to fund 75 percent of all benefits, leaving a manageable shortfall that can be corrected with relative ease and without significant benefit cuts.

Despite its overwhelming success, Social Security faces threats. In 2005, Pres. George W. Bush tried to privatize it. Although the American people rejected his plan, many of his supporters continue to push for ways to dismantle the system, using deficit reduction as an excuse. A GOP alternative budget authored by Rep. Paul Ryan (R-Wis.) has renewed the call for privatization and House Minority Leader John Boehner (R-Ohio) has proposed raising the retirement age to 70.

Under pressure by fiscal conservatives, President Obama authorized a National Commission on Fiscal Responsibility and Reform, which is charged with bringing down the deficit to 3 percent of the economy by 2015. The panel is supposed to review all areas of the federal budget, including taxes, military spending and benefit programs, and report to Congress by the end of the year. The House and Senate have agreed to vote on any recommendations where the commission is in agreement.

Many of the commissioners are conservatives and deficit hawks who say they will not support any new taxes, even for the wealthiest Americans. Instead, they focus on cutting Social Security benefits by raising the retirement age, changing the way benefits are calculated and reducing cost of living adjustments (COLA) for current and future beneficiaries.

A new study by the Center for Economic and Policy Research, however, finds that if these proposals are adopted, they would hurt low-and middle-income families and will be “especially painful” to retirees. For most seniors, Social Security represents more than half of their income. Average benefits are less than $14,000 a year. Raising the retirement age to 70 would amount to an average cut of 20 percent for all future benefit recipients. That’s because the vast majority of workers start collecting benefits before they reach full retirement age and take a permanent benefit reduction for doing so. Reducing the COLA is another type of cut. Reducing it by 1 percentage point would result in a 12 percent reduction for a retiree at age 75 and more than 20 percent at age 85.

Social Security must be preserved and not used as a scapegoat for deficit reduction.