Social Security Reform

Extracted Attributes

• Nickname

  Third Rail of American Politics

• 2015 Income

  $920 billion

• Official Name

  Old-age, Survivors, and Disability Insurance (OASDI)

• 2015 Benefits Paid Out

  $897 billion

• Primary Funding Source

  Payroll taxes

• Projected Trust Fund Peak Date

  End of 2020

• Workers per Beneficiary (2015)

  2.82

• Projected Trust Fund Peak Amount

  Approximately $2.9 trillion

• Projected Trust Fund Depletion Date

  2035

• Accumulated Surplus (as of Dec 2015)

  Approximately $2.8 trillion

• 2015 Cash Deficit (excluding interest)

  $70 billion

• 2015 Annual Surplus (including interest)

  $23 billion

• Annual Cost of SS Benefits as % of GDP (2000)

  4.0%

• Annual Cost of SS Benefits as % of GDP (2015)

  5.0%

• President Barack Obama's Stance on Privatization

  Opposed

• Projected Trust Fund Redemption Draw (2021-2035)

  Approximately $3 trillion from non-payroll tax government sources

• Federal Reserve Chairman Ben Bernanke's View (2006)

  Reform of unsustainable entitlement programs should be a priority; delaying reforms increases required tax hikes or benefit cuts.

• Annual Cost of SS Benefits as % of GDP (Projected 2035)

  6.4%

• Present Value of Unfunded Obligations (75-year forecast)

  $11.4 trillion

• Benefit Cut for Indefinite Solvency (if implemented 2016)

  19%

• Benefit Cut for Indefinite Solvency (if implemented 2034)

  21%

• President Barack Obama's Stance on Raising Retirement Age

  Opposed

• President Barack Obama's Stance on Taxable Compensation Cap

  Supported an increase

• Annual Cost of SS Benefits as % of GDP (Projected 2055-2086)

  About 6.1%

• Payroll Tax Rate for Indefinite Solvency (if implemented 2016)

  15% (from 12.4%)

• Payroll Tax Rate for Indefinite Solvency (if implemented 2034)

  16%

• Beneficiaries Relying on SS for 50%+ Income (Married Couples, 2015)

  53%

• Projected Payroll Tax Coverage (from 2034 onwards, without reforms)

  About 79% of scheduled payouts

• Beneficiaries Relying on SS for 50%+ Income (Unmarried Persons, 2015)

  74%

Timeline

• The Social Security Act was signed by President Franklin D. Roosevelt, establishing Unemployment Insurance, Aid to Dependent Children, Old Age Insurance (OAI), and Old Age Assistance (OAA). (Source: Web Search)

  1935-08-14

• Social Security tax collection began. (Source: Wikipedia)

  1937

• The Supplemental Security Income (SSI) program was federalized and assigned to the Social Security Administration. (Source: Web Search)

  1972

• Automatic cost of living adjustments (COLAs) were mandated for Social Security benefits. (Source: Web Search)

  1975

• COLA adjustments were brought back to 'sustainable' levels. (Source: Web Search)

  1977

• Amendments were made to the disability program to address issues of fraud. (Source: Web Search)

  1980

• Taxation of Social Security benefits was introduced, new federal hires were required to be under Social Security, and the retirement age was increased for younger workers to 66 and 67 years, based on recommendations from the National Commission on Social Security Reform. (Source: Web Search)

  1983

• Income tax on Social Security benefits for higher-income individuals began. (Source: Web Search)

  1984

• President George W. Bush appointed a commission to examine his proposed changes to Social Security. (Source: Web Search)

  2001-05-02

• Federal Reserve Chairman Ben Bernanke emphasized the urgency of reforming entitlement programs, including Social Security. (Source: Summary, Wikipedia)

  2006-10-04

• President Barack Obama issued an executive order mandating the creation of the bipartisan National Commission on Fiscal Responsibility and Reform to address Social Security's sustainability. (Source: Summary, Wikipedia)

  2010-02-18

• Social Security program payouts began exceeding cash program revenues (excluding interest). (Source: Summary, Wikipedia)

  2011

• Social Security paid out $897 billion in benefits against $920 billion in income, resulting in a $23 billion annual surplus (including interest) but a $70 billion cash deficit (excluding interest). (Source: Summary, Wikipedia)

  2015

• The Social Security Trust Fund is projected to reach its peak of approximately $2.9 trillion by the end of the year. (Source: Summary, Wikipedia)

  2020

• Projected period during which redemption of the Social Security Trust Fund balance will draw approximately $3 trillion from non-payroll tax government sources. (Source: Summary, Wikipedia)

  2021-2035

• Projected year from which payroll taxes will only cover about 79% of scheduled Social Security payout amounts without reforms. (Source: Summary, Wikipedia)

  2034

• The Social Security Trust Fund is projected to be depleted, after which only ongoing payroll tax collections will be available to fund benefits. (Source: Summary, Wikipedia)

  2035

Social Security debate in the United States

The Social Security debate in the United States encompasses benefits, funding, and other issues. Social Security is a social insurance program officially called "Old-age, Survivors, and Disability Insurance" (OASDI), in reference to its three components. It is primarily funded through a dedicated payroll tax. During 2015, total benefits of $897 billion were paid out versus $920 billion in income, a $23 billion annual surplus. Excluding interest of $93 billion, the program had a cash deficit of $70 billion. Social Security represents approximately 40% of the income of the elderly, with 53% of married couples and 74% of unmarried persons receiving 50% or more of their income from the program. An estimated 169 million people paid into the program and 60 million received benefits in 2015, roughly 2.82 workers per beneficiary. Reform proposals continue to circulate with some urgency, due to a long-term funding challenge faced by the program as the ratio of workers to beneficiaries falls, driven by the aging of the baby-boom generation, expected continuing low birth rate, and increasing life expectancy. Program payouts began exceeding cash program revenues (i.e., revenue excluding interest) in 2011; this shortfall is expected to continue indefinitely under current law. Social Security has collected approximately $2.8 trillion more in payroll taxes and interest than have been paid out since tax collection began in 1937. This surplus is referred to as the Social Security Trust Fund. The fund contains non-marketable Treasury securities backed "by the full faith and credit of the U.S. government". The funds borrowed from the program are part of the total national debt of $18.9 trillion as of December 2015. Due to interest, the Trust Fund will continue increasing through the end of 2020, reaching a peak of approximately $2.9 trillion. Social Security has the legal authority to draw amounts from other government revenue sources besides the payroll tax, to fully fund the program, while the Trust Fund exists; however, payouts greater than payroll tax revenue and interest income over time will liquidate the Trust Fund by 2035, meaning that only the ongoing payroll tax collections thereafter will be available to fund the program. There are certain key implications to understand under current law, if no reforms are implemented: Payroll taxes will only cover about 79% of the scheduled payout amounts from 2034 and beyond. Without changes to the law, Social Security would have no legal authority to draw other government funds to cover the shortfall. Between 2021 and 2035, redemption of the Trust Fund balance to pay retirees will draw approximately $3 trillion in government funds from sources other than payroll taxes. This is a funding challenge for the government overall, not just Social Security; however, as the Trust Fund is reduced, so is that component of the National Debt, and the Trust Fund amount is in effect replaced by public debt outside the program. The present value of unfunded obligations under Social Security was approximately $11.4 trillion over a 75-year forecast period (2016–2090). In other words, that amount would have to be set aside in 2016 so that the principal and interest would cover the shortfall for 75 years. The estimated annual shortfall averages 2.49% of the payroll tax base or 0.9% of gross domestic product (a measure of the size of the economy). Measured over the infinite horizon, these figures are 4.0% and 1.4%, respectively. The annual cost of Social Security benefits represented 4.0% of GDP in 2000 and 5.0% GDP in 2015. This is projected to increase gradually to 6.4% of GDP in 2035 and then decline to about 6.1% of GDP by 2055 and remain at about that level through 2086. President Barack Obama opposed privatization (i.e., diverting payroll taxes or equivalent savings to private accounts) or raising the retirement age, but supported raising the annual maximum amount of compensation that is subject to the Social Security payroll tax ($137,700 in 2020) to help fund the program. In addition, on February 18, 2010, President Obama issued an executive order mandating the creation of the bipartisan National Commission on Fiscal Responsibility and Reform, which made ten specific recommendations to ensure the sustainability of Social Security. Federal Reserve Chairman Ben Bernanke said on October 4, 2006: "Reform of our unsustainable entitlement programs should be a priority ... the imperative to undertake reform earlier rather than later is great." The tax increases or benefit cuts required to maintain the system as it exists under current law are significantly higher the longer such changes are delayed. For example, raising the payroll tax rate to 15% during 2016 (from the current 12.4%) or cutting benefits by 19%, or eliminating the annual maximum amount of compensation that is subject to the Social Security payroll tax, would address the program's budgetary concerns indefinitely; these amounts increase to 16% and 21% respectively if no changes are made until 2034. During 2015, the Congressional Budget Office reported on the financial effects of various reform options.

Web Search Results

• History of Social Security in the United States - Wikipedia

  The National Commission on Social Security Reform (NCSSR), chaired by Alan Greenspan, was empaneled to investigate the long-run solvency of Social Security. The 1983 Amendments to the SSA were based on the NCSSR's Final Report. The NCSSR recommended enacting a six-month delay in the COLA and changing the tax-rate schedules for the years between 1984 and 1990. It also proposed an income tax on the Social Security benefits of higher-income individuals. This meant that benefits in excess of a [...] Calls for reform of Social Security emerged within a few years of the 1935 Act. Even as early as 1936, some believed that women were not getting enough support. Worried that a lack of assistance might push women back into the work force, these individuals wanted Social Security changes that would prevent this. In an effort to protect the family, therefore, some called for reform which tied women's aid more concretely to their dependency on their husbands. Others expressed apprehension about the [...] the program flirted with immediate insolvency. From this point on, amendments to Social Security would take place in odd numbered years (years that were not election years) because Social Security reform now meant tax increases and benefit reductions. Social Security became known as the "Third Rail of American Politics." Touching it meant political death.

• Social Security | Pros, Cons, Debate, Arguments, Retirement ...

  The government in the past has ‘fixed’ the Social Security system by increasing taxes and retirement ages—and the system is still in trouble. Private accounts are a better solution for both the government and retirees.” March 27, 2017 Daniel J. Mitchell, senior fellow at the Cato Institute, in a video posted on his website to accompany the December 22, 2015, articled titled “The Personal and National Case for Genuine Social Security Reform,” stated, [...] During the 2000 U.S. presidential campaign, Republican nominee George W. Bush ran on the promise of letting “younger workers take a portion of their payroll taxes and put it in the marketplace.” Bush’s Social Security reform proposal won considerable public support, and some commentators gave it partial credit for Bush’s eventual victory over Democratic nominee Al Gore. On May 2, 2001, Bush appointed a commission to examine his proposed changes to Social Security, but his first term was [...] with House Speaker Newt Gingrich (R-GA) to put forward a bipartisan proposal to reform Social Security by using private accounts, but the plan never went ahead. (/procon/Social-Security-debate/Con-Quotes#pcref-2256833-73)(/procon/Social-Security-debate/Con-Quotes#pcref-2256833-74)(/procon/Social-Security-debate/Con-Quotes#pcref-2256833-75)

• Social Security (United States) - Wikipedia

  1935 The 37-page Social Security Act signed August 14 by President Franklin D. Roosevelt. The legislation included Unemployment Insurance, Aid to Dependent Children, Old Age Insurance (OAI), and Old Age Assistance (OAA). The old age insurance program gradually developed into the Old Age Survivors and Disability Insurance program, which is what Americans typically associate with "Social Security".( [...] Originally the benefits received by retirees were not taxed as income. Beginning in tax year 1984, with the Reagan-era reforms to repair the system's projected insolvency, retirees with incomes over $25,000 (in the case of married persons filing separately who did not live with the spouse at any time during the year, and for persons filing as "single"), or with combined incomes over $32,000 (if married filing jointly) or, in certain cases, any income amount (if married filing separately from [...] 1972 Supplemental Security Income (SSI) program federalized and assigned to Social Security Administration 1975 Automatic cost of living adjustments (COLAs) mandated 1977 COLA adjustments brought back to "sustainable" levels 1980 Amendments are made in disability program to help solve some problems of fraud 1983 Taxation of Social Security benefits introduced, new federal hires required to be under Social Security, retirement age increased for younger workers to 66 and 67 years

• Proposals to Change Social Security

  Policymakers have developed proposals and options that have financial effects on the OASDI Trust Funds. Many of these proposals and options have the intent of

• Historical Background and Development of Social Security

  A spurt of pension legislation was passed in the years immediately prior to passage of the Social Security Act, so that 30 states had some form of old-age

• Instance Of

  Q6451276