The report, scheduled for release this afternoon, will likely contain no surprises about the revenue shortfalls projected to start in the early 2020s and result in a depleted surplus by 2035. At that point, unless Congress has taken steps to shore it up, the program will be able to fund about 75 percent of benefits. By 2090, unfunded obligations would reach $11.4 trillion. Estimates beyond that paint an even bleaker picture.
However, Altman points to other information in the trustees’ lengthy assessment that often gets overshadowed.
For instance, the program isn’t expected to comprise a much larger percentage of gross domestic product in the future than it already does. Last year’s report showed the program’s cost equaled 5 percent of GDP in 2015 and would increase to 6 percent by 2035 and 6.1 percent in 75 years. The projected shortfall in that lengthy time frame was pegged as 0.9 percent of annual GDP.
Also expected in the report are solutions to prevent insolvency. The 2016 assessment showed that either reducing benefits by about 16 percent or generating revenue equivalent to a 2.58 percentage-point increase in payroll taxes would restore actuarial balance.
“The public is frequently told we can’t afford it,” said Mary Johnson, Social Security policy analyst for the Senior Citizens League. “We’d like a conversation about what we can do to have a more equitable way of generating revenue.”
One point of contention is the wage tax cap. This year, workers will pony up 6.2 percent of their earnings up to $127,200, with employers contributing the same. This means someone who makes, say, exactly double the maximum ($254,400) pays into Social Security at a rate of 3.1 percent of their whole salary.
“Earners above that threshold make out better,” Altman said.
Research from the Income and Benefits Policy Center at the Urban Institute in 2015 showed that an immediate elimination of the cap would extend the life of the surplus to 2055 instead of 2034.
Moreover, a survey by the Senior Citizens League shows broad support among older Americans for lifting the wage cap, with 72 percent of respondents supporting it.
Several congressional bills with Democratic backing have been introduced this year to expand benefits. However, competing issues – i.e., health care – and the ongoing partisan gridlock make the chance of action on the measures slim. President Donald Trump has said, meanwhile, that he would not make any cuts to retiree benefits. (His proposed budget, however, does include cuts to Social Security disability insurance.)
* Consumer Price Index for the Elderly (alternative way to measure cost-of-living increases)
While the program can fully fund benefits for close to another two decades, last year’s trustee report cautioned that the longer lawmakers delay taking action, the more severe the changes will need to be to restore solvency.
A 2015 AARP survey showed that 80 percent of respondents plan to rely on Social Security as a source of income in retirement. A third said it would be the source of income they rely on the most.
The latest federal data shows that the average monthly payment is $1,360.
“Congress should expand those modest benefits while ensuring that Social Security has sufficient revenue,” said Altman of Social Security Works. “The American people overwhelmingly want to see [the program] expanded, not cut.
“Lawmakers should follow their lead.”