"Today, the Social Security Trustees released their 2011 report on the financial status of both Social Security and Medicare. The reports make clear that both programs are on unsustainable paths, and reforms will be necessary to make them solvent. This analysis focuses on the financial status of Social Security."
Quotes on Social Security
"Paul in the year 1940 saves by paying one hundred dollars to the national social security institution. He receives in exchange a claim which is virtually an unconditional government IOU. If the government spends the hundred dollars for current expenditures, no additional capital comes into existence, and no increase in the productivity of labor results. The government's IOU is a check drawn upon the future taxpayer. In 1970 a certain Peter may have to fulfill the government's promise although he himself does not derive any benefit from the fact that Paul in 1940 saved one hundred dollars.... The trumpery argument that the public debt is no burden because 'we owe it to ourselves' is delusive. The Pauls of 1940 do not owe it to themselves. It is the Peters of 1970 who owe it to the Pauls of 1940.... The statesmen of 1940 solve their problems by shifting them to the statesmen of 1970. On that date the statesmen of 1940 will be either dead or elder statesmen glorying in their wonderful achievement, social security."
"This law, too, represents a cornerstone in a structure which is being built but is by no means complete. It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future administrations against the necessity of going deeply into debt to furnish relief to the needy. The law will flatten out the peaks and valleys of deflation and of inflation. It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness."
"Plainly the expectation is that many members of the present productive work force will in turn become beneficiaries rather than supporters of the program. But each worker's benefits, though flowing from the contributions he made to the national economy while actively employed, are not dependent on the degree to which he was called upon to support the system by taxation."
"The changes in this legislation will allow Social Security to age as gracefully as all of us hope to do ourselves, without becoming an overwhelming burden on generations still to come. . . . Our elderly need no longer fear that the checks they depend on will be stopped or reduced. These amendments protect them. Americans of middle age need no longer worry whether their career-long investment will pay off. These amendments guarantee it. And younger people can feel confident that Social Security will still be around when they need it to cushion their retirement."
"The 'right' to Social Security benefits is in one sense 'earned,' for the entire scheme rests on the legislative judgment that those who in their productive years were functioning members of the economy may justly call upon that economy, in their later years, for protection from 'the rigors of the poor house as well as from the haunting fear that such a lot awaits them when journey's end is near.'
To engraft upon the Social Security system a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands.
We must conclude that a person covered by the Act has not such a right in benefit payments as would make every defeasance of 'accrued' interests violative of the Due Process Clause of the Fifth Amendment."
"Under the intermediate assumptions of the Social Security Trustees, even if policymakers make no changes to the system and Social Security is unable to pay full benefits after the Trust Fund is exhausted, future retirees will still get approximately three-quarters of what is scheduled under current law. So the question facing today's younger workers should not be, 'Will I get anything out of Social Security?' but rather, 'Just how much will I receive when I retire, and how much will I have to pay in taxes before I get there?"
"SSA's priority is to deliver high-quality, citizen-centered service to every claimant, beneficiary, and the American taxpayer. In FY 2006, SSA maintained individual payment records for more than 53 million people who received Social Security benefits or Supplemental Security Income (SSI) each month. During this time those payments exceeded $586 billion."
"SSA's progress towards accomplishing its mission is directly linked to the level of resources it receives. If we had received the President's budget each year from FY 2002 through FY 2006, SSA would have been able to reduce the backlogs for initial disability claims and hearings. Funding at the President's budget level would also have allowed the Agency to fund program integrity activities at a more appropriate level. These activities permit SSA to ensure that recipients of disability insurance benefits continue to be eligible and that SSI recipients continue to meet income and resource criteria for program eligibility."
"If the guiding philosophy behind the traditional system of social insurance could be described as 'We're all in it together,' the philosophy behind Bush's Ownership Society seems to be, 'You're on your own.' Relying on the magic of the marketplace is a tempting idea, elegant in its simplicity. But it won't work.
Take the Administration's attempt to privatize Social Security. The Administration argues that the stock market can provide individuals a better return on investment, and in the aggregate they are right; historically, the stock market outperforms Social Security's cost of living adjustment. But individual investment decisions will always produce winners and losers. What would the Ownership Society do with the losers?
That doesn't mean we shouldn't encourage individuals to pursue higher-risk, higher-return investment strategies. They should. It just means that they should do so with savings other than those put into Social Security."
"Acting sooner rather than later on Social Security is in everyone's interest. ... The earlier we begin, the more options we'll have. ... If we wait until we're staring at bankruptcy, the only recourse will be an immediate tax increase. Benefit cuts can reap big savings over time, but not in the short run. ...
This is primarily a demographic problem that demands a demographic solution. ... As long as notice is given far enough in advance and the increase is phased in over a number of years, a higher retirement age shouldn't surprise anyone. ... People will be able to plan for it."
"While SSA does an admirable job of calculating and delivering benefits to millions of Americans, it has no experience whatever in investing. The Department of the Treasury collects taxes for SSA, and the Bureau of the Public Debt turns any taxes that are not immediately spent into special issue Treasury bonds. But at no point does the SSA have substantive dealings with financial markets or private-sector financial institutions.
In fact, allowing the SSA to regulate personal retirement accounts could create a serious conflict of interest. If Congress created a voluntary system of PRAs, where workers can choose whether they wish to divert a portion of their Social Security taxes into such an account or remain in the existing SSA-administered version, that would place the two systems in competition with each other. If SSA had the ability to regulate personal retirement accounts, it could be tempted to use its authority to obstruct the development of these accounts with unnecessarily heavy regulatory burdens.
As a result, SSA should have no role in regulating financial institutions that manage personal retirement accounts. A massive bureaucracy that can take years to determine eligibility for disability claims simply does not have the expertise or ability to understand the innovative and rapidly changing financial world. SSA could add nothing positive either to funds management or to consumer protection, and it could do a great deal of damage by misunderstanding the nature of the business."
"It is possible to tax on [an individuals] entire income and to only pay him benefits on a lower amount of his income. However, this would be a significant departure from the traditional linkage between the taxes a worker pays and his or her benefits. Such a move would re-cast Social Security towards a welfare program and probably erode the public support of the program. Raising the taxable wage base accomplishes little at great risk."
"Unfortunately, there continues to be a disconnect, made worse by the downturn in the economy, between the hopes and realities of a great many Americans looking to retire in the near future. This report further illustrates the need for Congress to act, to increase the availability of all retirement options and help Americans secure the retirement they deserve."
"The solutions generated by this study provide a realistic check as well as hope to the millions of Americans evaluating their retirement. It may make a great deal of sense for certain retirees to convert a portion of their assets into a guaranteed source of income. Doing so will let Americans feel more secure that they will not outlive their finances and be able to live out their golden years as comfortably as possible."