Wednesday, September 30, 2009
Editorial: An SOS on Social Security
The retirement system's expected deficit is no cause for panic among older Americans. It is an alarm, though, sounding for the future.
From the RoundTable blog
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A lot of older workers who have lost their jobs during the recession have found that, for them, laid off as good as means retired. Employers favor younger, cheaper hires.
So, instead of a few more years earning career-peak wages, workers at least 62 years old -- the minimum age for drawing Social Security -- have been going from jobs to the unemployment line to filing for benefits.
Not all who get the pink slip fail to find work, but enough that the increased number of early retirees has created unexpectedly high demand. This at the same time that the recession has hit the Social Security system from the supply side, too.
The 6.9 million jobs lost in the U.S. have meant a lot fewer dollars flowing into a system funded by payroll taxes.
The bottom line for individuals forced into early retirement is a benefit smaller than they had planned on, at a time when, for many, their life savings shrank or disappeared in the global financial collapse.
The short-term bottom line for the nation is that for the next two years, according to Congressional Budget Office projections, Social Security will be paying out more than it collects, to the tune of $10 billion in 2010 and $9 billion in 2011.
Retirees are not in danger of losing their government safety net. Social Security retirement and disability benefits -- also up in the recession -- will be paid from $2.5 trillion in surpluses from previous years. The expected two-year shortfall, though, will add to the overall federal deficit. And, though the CBO expects a return to surpluses in 2012, it projects permanent deficits starting in 2016.
The trillions in the Social Security trust fund then will start dwindling. If nothing changes, all the money is expected to be gone in 2037. Few experts expect that to happen, because Congress can save the program -- and it must -- for today's younger Americans and for future generations.
Lawmakers can restore the retirement system to good health by raising the ceiling on income subject to Social Security taxes, raising the tax rate slightly or the age of eligibility for benefits, or, as is likely, passing some mix of these proposals.
Each will meet political resistance. Both parties in Congress will have to gather their courage and push back, for the sake of the nation.
The Great Recession that today has pulled so many middle- and working-class Americans to the verge of insolvency should be all the reminder needed about why the safety net was put in place.
