President Franklin D. Roosevelt signed the Social Security Act on Aug. 14, 1935. Upon signing the legislation he stated that:
“We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”
Social Security has indeed successfully insured millions of Americans against some of life’s unavoidable hazards and vicissitudes.
Social Security is one of the country’s most successful government programs. For most elderly Americans, Social Security provides a majority of their income. Social Security is also arguably America’s most effective poverty-fighting program, bringing elderly poverty down from almost 38% to less than 10%, which is lower than the national poverty rate.
Additionally, it is important to remember that Social Security is a social insurance program. This means it will continue to pay benefits regardless of whether or not you outlive your total lifetime contribution, which a typical American retiree likely will.
In this way, Social Security is the type of program you might design from behind a “veil of ignorance.” It is a program that ensures that you will have the means to survive in retirement, regardless of whether you were able to voluntarily save during your working years or not, regardless of whether you outlive your lifetime contribution or not.
Surveys show that the program remains very popular in the United States regardless of respondents’ age, educational attainment, income, or political orientation. But many Americans worry: “Will Social Security be there when I retire someday?”
The truth is, even if we did nothing at all, benefits would continue to flow. And with modest changes, Social Security can keep paying promised benefits and even make some improvements.
Every two weeks the Social Security program receives an infusion of money from payroll taxes and that money pays for the benefits of current beneficiaries. As long as people are working there will be funding for those currently receiving benefits.
In years past, the number of workers in the labor force was large enough to support the number of beneficiaries. With falling fertility rates this is no longer the case, so the amount of money provided by current workers is less than is needed for current beneficiaries. Full benefits continue because of the Social Security Trust Funds, which make up the difference. But those funds will be depleted sometime around 2034. At that point the program will not “go broke” — it will continue to pay out but at about 76% of promised benefits. If we do nothing, this is the future of Social Security.
Surveys show that strong majorities of Americans — whether they be old or young, low- or high-income, Republicans or Democrats — believe that it is crucial for the U.S. to preserve full Social Security benefits for future generations, even if it means increasing payroll taxes.
Can Social Security be adjusted to continue paying full benefits to future generations? Yes, and the fixes are actually rather straightforward and manageable.
According to Kathleen Romig, a senior policy analyst at the Center on Budget and Policy Priorities, a few easy tweaks could make the program sustainable for the foreseeable future at full benefits.
I asked her whether Social Security is broken, and she responded, “No. It’s going to need some tweaks in order to be sustainably financed over the long term, but the fundamental structure is sound.”
Romig explained that a slight increase in the payroll tax (perhaps increasing the current 6.2% to somewhere around 7% for both employees and employers), combined with removing the cap on taxable earnings (currently around $142,000), would do the trick.
Making these changes is a choice. If we as a people value this program and want it to continue at full strength, there is no reason that we cannot make this choice.
Freedom is a cherished American value. Freedom is not just about the absence of something causing you harm, such as violence, or oppressing you, such as an authoritarian government. Freedom is also about the presence of something, such as the conditions, opportunities, resources, and abilities necessary to live the lives that we wish to lead.
We will all face the inevitable constraints of old age, such as reduced labor market participation and health challenges.
Social arrangements and policy decisions can either constrain or enable our freedom as we enter this period of our lives.
Making logical, reasonable, and manageable adjustments to the Social Security program will help to ensure a desirable sense of freedom for millions of Americans for generations to come.
Lawrence M. Eppard is a sociology faculty member at Shippensburg U niversity and host of the podcast Utterly Moderate at UtterlyModerateNetwork.com.