President Joe Biden has repeatedly tried to distract Americans by calling for Republicans to keep their hands off Social Security and Medicare as they work to rein in out-of-control spending. There are two big problems with Biden’s distraction: 1. Republicans are pushing for cuts to “discretionary spending,” the money Congress appropriates every year, which doesn’t include Social Security or Medicare because the two programs are considered “mandatory spending,” 2. Doing nothing as Biden wants will cut the average dual-income retiree couple’s Social Security benefits by $17,400 in 2033, according to a recent analysis by the Committee for a Responsible Federal Budget.
The Congressional Budget Office and the Social Security Trustees’ Report have confirmed that the Social Security retirement trust fund will be depleted in 2033, causing a 23% cut in benefits. With this latest report from CRFB, we can now quantify what that cut will mean for seniors retiring in 2033:
- Single source of income, low-income retiree: -$7,900
- Single source of income, medium-income: -$13,100
- Single source of income, high-income: -$17,300
- Dual-income, low-income retiree: -$10,600
- Dual-income, medium income: -$17,400
- Dual-income, high-income: -$23,000
For a typical retiree, a nearly $1,500 cut in monthly benefits will lead to disaster as it would require cutbacks to food, utilities, and medication.
Social Security is a unique federal program in both its funding and benefits. Under federal law, the Social Security portion of payroll and self-employment taxes goes into the Old-Age and Survivors Insurance (OASI) trust fund to pay for current benefits, with any remaining funds exchanged for special bonds backed by the U.S. Treasury. This means that today’s workers pay for today’s beneficiaries; however, as more seniors retire, more benefits are taken out of the system than deposited by workers. To cover these costs, bonds are redeemed, and the trust fund is slowly depleted. On its current path, the trust fund will be fully depleted in 2033; at that point, only the money coming in from payroll taxes will be available to benefits because Congress does not appropriate discretionary spending for Social Security.
AMAC Action has advocated for policies to guarantee the long-term solvency of the Social Security trust fund to prevent the 23% cut in benefits. This plan, the Social Security Guarantee, would ensure retirees get back every dollar they and their employer paid into the system, not raise taxes on workers, and ensures the program lives up to its promise to be an anti-poverty program.
Sadly, President Biden and Congressional Democrats know that if they run out the clock, politicians will have no choice but to raise taxes and turn Social Security from an insurance program into a welfare program. Every senior at or near retirement today knows Social Security is not welfare and should not be treated as welfare, but that can only be true if seniors demand Congress to guarantee Social Security.
Bob Carlstrom is the President of AMAC Action.