Tag: social security benefits
Yes, Social Security Is Fiscally Safe -- Unless Republicans Screw Us All

Yes, Social Security Is Fiscally Safe -- Unless Republicans Screw Us All

Last week’s release of the 2025 Social Security Trustees Report provoked a lot of teeth gnashing, hair pulling, and gasket blowing about the program facing insolvency. To those of you who are freaking out, please stay calm. While pundits can make a good living promoting scare stories about Social Security, their nightmare scenarios have little basis in reality.

To be clear, the most recent trustees report does show the program will face a shortfall, so nine years from now it will not be able to pay full scheduled benefits. But it is important to get a clear picture of what that means.

First, let’s look at the numbers. Under current law, the government cannot pay out benefits if the money is not in the Social Security trust fund. Projections show that in 2034, after the bonds held by the trust fund have been sold off, the program will have enough money to pay 82 percent of scheduled benefits.

While a benefit cut of 18 percent would be terrible for most beneficiaries, 82 percent is still very far from zero. So, the idea that the program will just go away is a complete invention. Of course, Congress could vote it out of existence, but that doesn’t seem very likely given the share of Americans who are current beneficiaries or expect to be in the near future.

Another argument that deserves to be attacked head-on is the charge that Social Security in its current form is a major cause of generational inequality. While baby boom retirements substantially reduced the ratio of workers to retirees, there is little change projected for later years in this century. The share of scheduled benefits that could be paid, absent any action from Congress, would fall only modestly in subsequent decades.

Going out to 2065, when today’s 25-year-olds will be turning 65, the program is projected to be able to pay 74 percent of scheduled benefits. This would mean that, if Congress never touches the program and the projections prove correct, a lifetime medium earner would get a benefit of $30,900 in 2065, more than 20 percent higher than the $25,200 a medium earner who retires today would get (all numbers are in 2025 dollars). Where’s the generational inequality?

The fuller picture is somewhat more complicated. We expect retirees’ benefits to bear some relationship to their income while working. The benefit the program would be able to pay in 2065, absent any changes, would be a lower share of lifetime earnings than what is the case today. But then again, why are workers over the next 40 years expected to have higher lifetime earnings? It’s because they have benefited from more capital stock and better infrastructure and technology than what boomers had when they entered the workforce.

We can have a serious debate about whether the rate of increase in real wages and living standards is as rapid as it should be, but there is no doubt that we are headed in the right direction, at least on average (an important point I will return to shortly). If we want to concern ourselves with generational inequality, we should consider the condition of the planet we are leaving our kids. If we don’t do more to address global warming, the planet will be a much less pleasant place in 30 or 40 years than it is today. That would pose a very real and serious threat to young people.

How big is the funding gap?

There are two important points to make about the projected funding gap. First, it is more of an accounting problem than an economic one. Second, it is not especially large relative to other expenses the country covers.

The first point is when the trust fund runs out of bonds, as is projected in 2033, it will not create a new economic burden for the country. The government will not be paying substantially more in benefits in 2034 than in 2033, it just won’t have bonds in the trust fund to cover part of the expense.

That’s an accounting issue. The increase in spending on Social Security from 2033 to 2034, measured as a share of gross domestic product (GDP), would be just 0.03 percentage points. That’s the full extent of the increased economic burden the year the trust fund faces depletion, amounting to less than one percent of the Pentagon’s budget.

If the goal is to completely cover the annual funding gap, the projections suggest that it would require increased revenue and/or a cut in spending of a bit more than one percent of GDP (one-third of the Pentagon budget). The reason for this gap is the program has been spending more than its income for more than a decade, with the annual gap growing continually larger over this period. The bonds accumulated in the trust fund was filling this gap.

There is nothing nefarious here. It was all by design and fully public. The last major adjustment to the program in 1982 structured it to build up a large trust fund while the baby boomers were in the workforce to be spent down when they retired.

If the point is to fill the gap by committing additional revenue to the program, the government could raise the cap on wages that are taxed for Social Security (currently $176,100), increase the tax rate, or transfer other government revenue to the program, which would literally be just accounting. If $300 billion a year of general revenue (roughly 1 percent of GDP) would go to the Social Security fund, it would reduce or eliminate the shortfall in the Social Security trust fund but have no effect on the federal budget deficit as it is usually reported. In short, the government could easily come up with the money to pay all scheduled benefits.

Tax the rich

If the government decides to raise additional tax revenue to cover the Social Security shortfall, it makes sense that the bulk of it would come from wealthiest households. They have been the big winners in the economy over the last half century.

But the logic for taxing the rich goes even further. The upward redistribution over the last 50 years was a major factor in causing the program’s shortfall. In 1982, the last time Congress made major changes to the program, only 10 percent of wage income was above the cap and thus escaped taxation. Currently close to 18 percent of wage income is above the cap.

In addition, since 2000 there has been a major shift from corporate wages to profits. In 2000, profits were 18.2 percent of corporate income. In 2024, they were 28.3 percent. If corporate profits had remained at their 2000 share, the average wage in the corporate sector would be more than 12 percent higher than it is today. The combination of the upward redistribution of wage income—from ordinary workers to highly paid professionals, Wall Street types, and corporate executives—and the shift from wages to profits, explains why the program is projected to run short. That makes a good argument for modifying Social Security so that the segment of the population that benefited from this upward redistribution pays more to support the program.

There is one other point worth making about the prospects for additional tax revenue. The government could raise the tax rate. While any additional payments to support the program should mainly come from the rich, it is not absurd to think that ordinary workers could pay a higher tax rate. After all, the program is designed to support a considerably longer retirement than was the case in 1990, the last time there was any tax rate increase.

From 1966 to 1990, the tax rate on wages rose from 5.8 percent to 12.4 percent, an increase of 6.6 percentage points over 24 years. By contrast, there has been no increase in the last 35 years. If the tax were to increase, say by two percentage points over the next two decades, it would hardly seem like a major crisis. The average real annual wage is projected to be 32 percent higher in 2045 than it is today. It would be difficult to make a case that workers in 2045 would be suffering a major hardship if the government took back 2 percentage points of that increase in the form of higher Social Security taxes. We do have to worry about inequality, but for the last decade, workers at the bottom have been roughly keeping pace with average wage growth.

It is understandable that politicians running for office don’t like to talk about tax increases, but in this respect, Donald Trump can perhaps offer a useful lesson. He is now imposing import taxes—tariffs—that could well reach $400 billion a year, equivalent to a four percentage point increase in the payroll tax. He is doing this even without getting congressional approval. To date, Trump’s tax hike has prompted only limited public complaint. It is hard to believe that a tax increase half this size, phased in over 20 years, to support the country’s most popular social program would be an impossible political lift.

Social Security is a great program

On this last point, it is worth reminding everyone how incredibly popular Social Security is. It enjoys overwhelming public support across the political spectrum. Even supermajorities of Republicans like it.

The reason is obvious. For more than 80 years, Social Security has provided the country’s workers and their families a substantial degree of economic security. It even provides security to high-income workers who may not think they need it, because even highly paid doctors and lawyers may find they are no longer wealthy after a serious illness or a car accident.

The program is also incredibly efficient. Administrative costs for the retirement program are less than 0.4 percent of the benefits paid each year. By all measures, the amount of fraud in the program is minimal. Elon Musk’s Department of Government Efficiency (DOGE) team confirmed that fact. While they went in with grand promises to root out waste and fraud, they essentially found nothing and instead promoted such wildly absurd lies as 20 million people over age 120 were getting benefits or 40 percent of the phone calls to the agency were from people trying to commit fraud. (The small grain of truth in DOGE’s 40 percent figure is 40 percent of the identified instances of fraud were initiated through phone calls, which means 60 percent were either initiated online or via in-person visits.)

In short, Social Security does what it is designed to do. As much as the program’s political enemies and the news media like to hype scare stories, there is no reason it will not be around long into the future, paying out full scheduled benefits.

Dean Baker is an economist, author, and co-founder of the Center for Economic Policy and Research. His writing has appeared in many major publications, including The Atlantic, The Washington Post, and The Financial Times. Please consider subscribing to his Substack Dean Baker.

Reprinted with permission from Substack.

For Labor Day, Trump Attacks Workers And Social Security

For Labor Day, Trump Attacks Workers And Social Security

Reprinted with permission from Alternet

Labor Day is a holiday designed to honor America’s workers. Instead, Donald Trump continues to attack them. Indeed, his administration is in the midst of a stealth effort that not only attacks workers but also our earned Social Security benefits and our federal government. The long-term goals of Trump and his Congressional allies are to destroy the labor movement, wreck the federal government, and end Social Security.

That may sound hyperbolic, but it is not. Trump’s latest stealth attack is not only anti-union, it will eventually make it so difficult to access Social Security benefits that some beneficiaries (particularly those attempting to qualify for their earned Social Security disability benefits) never receive them at all. Others will eventually claim their benefits, but only after an unnecessarily burdensome process of visiting field offices that are rarely open and have hours-long lines when they are.

For Republicans, that’s all according to plan. Trump and his Congressional allies are intentionally breaking our government so they can turn around and say that it doesn’t work.

Trump’s war on workers is extremely well documented. It is perhaps best illustrated by his anti-worker nominees to be Secretary of Labor, a pack of wolves in the hen house. The first nominee was guilty of scores of labor law violations and forced to pay millions of dollars in settlements to workers he cheated. He was ultimately rejected because even many Republicans decided that they couldn’t vote for an ethically challenged nominee who was also an accused domestic abuser.

Trump’s second anti-worker nominee was Alex Acosta, best known for his sweetheart deal with the billionaire pedophile Jeffrey Epstein. His current acting Secretary of Labor is, if anything, more anti-worker than the first two. And his newest nominee for the job has spent his career defending businesses seeking to roll back labor protections.

Trump’s war on the federal government is also well-documented. His administration is upending the lives of career civil servants by telling those based in Washington to move to the Midwest and those based around the country to relocate to Washington. Just before the beginning of the school year, these workers have been given virtually no time to decide if they will relocate or resign. This is having the desired effect: Most are quitting.

The Trump Administration’s actions are intended to shrink government to the size where they can, in the words of Republican activist Grover Norquist, “drown it in the bathtub.”

Trump’s hostility to Social Security and Medicare is equally clear. He recently floated a proposal to reduce Social Security’s funding. Days later, he gloated over his intentions to cut Medicare as a “fun second-term project.”

The American people did not vote for these benefit cuts. In fact, Trump ran on a promise to protect Social Security and Medicare. This was a shrewd political strategy, given that voters of all political stripes strongly value our Social Security and strongly oppose cutting its modest but vital benefits. They strongly value our Medicare, as well. But as with his promise to raise taxes on the rich, to provide quality health care for everyone, even to act presidential, Trump has done the exact opposite now that he’s in the White House.

Despite their claims, the GOP elite’s hostility to Social Security and Medicare — indeed, to anything the government does to help us improve our lives — doesn’t have anything to do with the debt or deficit. It has everything to do with the donor class trying to avoid paying their fair share toward the common good.

Yet because Social Security and Medicare are so popular, Republicans know that direct benefit cuts will be impossible to pass into law, as long as all of us pay attention. That is why Trump and his Congressional allies are conducting a stealth war, using guerilla warfare tactics against our earned benefits.

One of their most nefarious tactics is undercutting the Social Security Administration (SSA), the agency charged with ensuring that workers receive their earned Social Security benefits in a timely and stress-free manner. SSA has suffered nearly a decade of budget cuts from Congressional Republicans. These cuts have resulted in office closures, staff reductions, and a years-long wait for disability hearings.

Attacks on SSA don’t just hurt the agency and its 60,000 workers. They hurt all Americans by making it increasingly difficult to collect the Social Security benefits we earn with every paycheck. That’s why all of us should fight to defend it.

At SSA and across the federal government, the Trump Administration is playing hardball. It has issued anti-worker executive orders. It has failed to negotiate in good faith with those representing federal workers. And recently, the Trump administration launched a new assault. It arbitrarily and unilaterally sought to impose a new contract on SSA workers. That imposed contract would effectively destroy the ability of the workers’ union to represent them.

The Trump Administration’s goal is to make conditions at SSA so intolerable that demoralized workers will quit in droves, taking essential institutional knowledge with them. This will directly affect the hundreds of millions of us who call SSA or visit a local field office regarding our earned Social Security benefits.

Federal workers are fighting back in the courts. Their Democratic allies in Congress are seeking to come to their aid, but they do not control the White House and Senate. The only way to protect the hard-working civil servants at the Social Security Administration, and thereby protect our Social Security and Medicare, is to make Donald Trump a one-term president.

 

Nancy J. Altman is a writing fellow for Economy for All, a project of the Independent Media Institute. She has a 40-year background in the areas of Social Security and private pensions. She is president of Social Security Works and chair of the Strengthen Social Security coalition. Her latest book is The Truth About Social Security. She is also the author of The Battle for Social Security and co-author of Social Security Works!

This article was produced by Economy for All, a project of the Independent Media Institute.

How Divorce And Remarriage Affect Your Social Security Benefits

How Divorce And Remarriage Affect Your Social Security Benefits

By Janet Kidd Stewart, Chicago Tribune (TNS)

Q. I am 64 and work full time. I plan to claim Social Security benefits at 70. My ex-husband is 66 and we were married for 19 years. I remarried at 61. Am I entitled to some of my ex-husband’s benefits? Am I eligible for my current husband’s? Can I claim spousal benefits on my ex-husband’s record now and hold off on mine until age 70?

A. Generally, a subsequent remarriage takes away the ability to collect divorced spousal benefits, said Robin Brewton, vice president of client services at Social Security Solutions Inc. There are very limited exceptions. You could consider claiming a spousal benefit on your current husband’s work record when you reach full retirement age, letting you later switch to benefits on your own record at age 70, if that benefit would be higher after those four years of delayed retirement credits, Brewton said.

You can file for early, reduced spousal benefits now because you’ve been married longer than a year, Brewton said. But doing so before reaching full retirement age would mean you wouldn’t get to choose which benefit to take, and your benefit would automatically be calculated as a blend of the two, which would be a permanent reduction in your maximum benefit. Be aware that because of your age, you are among the last Social Security beneficiaries who are going to have the option to restrict your claim in this way. A recent congressional budget amendment killed off this strategy for anyone younger than 62 at the end of 2015. Also be aware that because you remarried after age 60, you may be entitled to divorced widow’s benefits when your first husband dies, so that could potentially affect your benefit calculation.

Q. My wife and I are in our late 70s, own a condo and have a little over $500,000 in assets, jointly owned in a revocable living trust. Nine months ago, my wife was diagnosed with Alzheimer’s and seems to be deteriorating. My daughter suggested I change ownership of some assets so that, in the event my wife is institutionalized, I wouldn’t be left destitute. I’m familiar with Medicaid’s five-year look-back period. Are there any alternative strategies to pursue and would I lose complete control of our assets if I pursued them?

A. There are some planning steps to take in cases like these, said Mark Munson, an attorney with Wisconsin law firm Ruder Ware. Because Medicaid is a joint federal and state program, however, the rules can vary widely depending on where you live, so it’s important to hire a qualified estate-planning attorney to oversee your strategy, Munson said.

The National Academy of Elder Law Attorneys and the National Elder Law Foundation maintain member directories and the latter certifies elder-law attorneys. Generally, however, you’ll want to learn your state’s current exemption amount for assets that can be retained by the “community” spouse (you) and still allow for your wife to qualify for Medicaid, Munson said.

The home you live in, a car and personal items are typically exempt assets as well, he said, so decide if there are home improvements or a mortgage payoff that makes sense for your situation. Finally, if there are remaining assets, you might look into a so-called Medicaid-compliant annuity, which could pay you income during your life in order to meet your own expenses and not thrust you onto public assistance as well, Munson said. Finally, he said, make sure you and the attorney plan for what would happen to your assets if you die first and your wife is on Medicaid.

ABOUT THE WRITER

Janet Kidd Stewart writes The Journey for the Chicago Tribune. Share your journey to or through retirement or pose a question at journey@janetkiddstewart.com.

(c)2015 Chicago Tribune. Distributed by Tribune Content Agency, LLC.

Photo: Jason Hutchens via Wikimedia Commons

 

Yes, Social Security Is an ‘Entitlement’ — Literally

Q: In a recent column, you advised a 55-year-old man who had just lost his job and had some back problems to file for Social Security disability benefits. To quote from your column: “It doesn’t hurt to try filing for disability benefits.” That’s what’s wrong with our country today. We have an entitlement culture. Everyone thinks they are due something from the government. And you are just perpetuating this entitlement problem by encouraging this guy to file for Social Security benefits!

Q: Your recent column advising a man to file for disability benefits really ticked me off. You [blankety-blank] liberals never met a government program you didn’t like. And by trying to get as many people as possible on the taxpayer’s gravy train, you’re just adding to the problem. No wonder our country is in such a mess. We need to start cutting government programs, not encouraging more people to apply for them!

A: Gosh, sometimes I write what I think is the simplest little column trying to help a guy in a tough situation — and I catch all kinds of grief for it. These two emails are just a sampling of the many I received chastising me for suggesting that a man file for Social Security disability benefits. And some of the responses I got were downright mean and nasty! I guess I pushed a few buttons that are indicative of the conservative “get the government off my back” mood our country seems to be in.

Here was the story. A 55-year old man had worked at the same job for the past 30-plus years and had recently been laid off. He said he was looking for work but wasn’t having any success. He mentioned that he had severe back pain and although he was reluctant to do so, his wife wanted him to file for Social Security disability benefits. He emailed me asking what chance I thought he had of qualifying for such benefits.

In my column, I essentially told him two things. First, I told him the obvious: He would have no chance if he never filed for disability benefits. And then I did say that it wouldn’t hurt to try filing for such benefits, and I told him how to do so. But the second thing I told him is that I thought there was a pretty good chance he would be considered simply unemployed and not disabled.

I explained that to qualify for Social Security disability benefits, you must have an impairment so severe that it is expected to keep you out of work for at least 12 months. Because he himself said he was looking for work, it sounded to me like he wouldn’t meet that legal definition of a disabling condition.

But here is the point: He has every right in the world to file for Social Security disability benefits. We all do. And it’s my job to tell him so. In this guy’s case, he worked and paid Social Security taxes for more than 30 years. He’s out of work. He has a medical condition that is causing him pain. And I have learned in four decades of working with the Social Security program that many people who file for Social Security disability benefits have more medical problems than they initially allege.

For example, in addition to his back problems, this guy might have high blood pressure. He might have a little heart tremor. He might have hearing loss. His back pain alone may not be enough to qualify him for benefits. But a combination of impairments might make him legally disabled.

I don’t know anything about the man other than what he wrote in his short email. But I would have been entirely negligent had I answered him by saying something like: “You’ve got a bad back. Well that’s tough! I’ve got a bad back, too. You are not eligible for Social Security disability benefits, and you have no right to apply for them!”

I guess that’s the message all the people who got upset with my answer wanted me to deliver to this guy.

Many people throw around the term “entitlements,” as if all government programs are free giveaways. And according to these folks, everyone today feels entitled to something, and that’s why this country is going to you-know-where in a hand basket! They are especially upset with those “[blankety blank] liberals,” who just encourage everyone to get on the entitlement train. And if you listen to the anti-government crowd, they’ll tell you that Social Security is the lead car on that gravy train.

Well, Social Security truly and literally is an “entitlement” program. Retirement, disability, and survivor’s benefits make up what is known as Title II of the Social Security Act. And the law says that if you work and pay taxes for a required amount of time and if you meet all the other eligibility requirements, you are indeed entitled to Social Security benefits.

I must, however, make this important semantic point: There is a difference between being eligible for a government benefit and being entitled to it. On the very first day of my training class, when I joined the Social Security Administration over 40 years ago, I was taught that everyone who works and pays taxes is potentially “eligible” for Social Security benefits, but you don’t actually become “entitled” to them until you file and sign a legal application for benefits and your claim is approved.

Like it or not, Social Security is an entitlement program. And as taxpayers, each one of us has every right to apply for such benefits.

If you have a Social Security question, Tom Margenau has the answer. Contact him at thomas.margenau@comcast.net.

COPYRIGHT 2011 CREATORS.COM

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