Last November the Huffington Post quoted Elizabeth Warren as saying:
“Social Security has a $2.7 trillion surplus. If we do nothing, Social Security will be safe for the next 20 years and even after that will continue to pay most benefits,” she said. “With some modest adjustments, we can keep the system solvent for many more years –- and could even increase benefits.”
The amount in the Social Security Trust is needed to pay benefits through 2034, it is not a surplus. There used to be an annual surplus when incoming payroll taxes were greater than expenses, but that stopped a few years ago. There is no surplus. The money in the Trust is needed to pay some known liabilities. By the time Social Security can “pay most benefits” all the money in the Trust will be gone (the Trust will have redeemed all its bonds from the Treasury – and the Treasury will have borrowed more money to do that). That “most benefits” is 75% of what beneficiaries are collecting, so if you are collecting $1500 a month, come 2034, you will receive $1125. Reduced benefits will be paid only by incoming payroll taxes.
As for Warren’s “modest adjustments,” the Trustee report says the shortfall is equal to 2.88% of payroll. You could also modify the COLA in several ways. And, of course, as Warren and friends favor, you can eliminate the cap on taxable wages (without an increase in benefits reflecting the higher contributions). Many upper middle class workers and their employers may not see a 6.25% tax increase as a modest adjustment. And such a change turns Social Security into another welfare program. That’s not what Democrats and Republicans voted for in 1935. Eliminating the taxable wage cap does not fully solve the current problem …
and we haven’t even talked about increasing benefits‼️
Populist rhetoric is the most dangerous element of American life. It is accepted without question by so many people who spend no effort in looking at the facts and long term consequences.