Conference on Aging Highlights Dire Situation for Social Security

The White House Conference on Aging happened this week. The media and policy experts highlighted the fact that Social Security is on a collision course to insolvency. Politicians and the Obama administration should be aware that small changes to the program can make the program solvent for years to come and pave the way for more structural changes in the future. Social Security beneficiaries need Social Security reform proposals that will not increase the retirement age, decrease benefits or increase taxes. The reforms outlined below if enacted could pave the way to more reforms in the future by making the program more solvent and transparent, two criticisms the current program faces.


  1. Lock the trust fund.

Payroll taxes should be collected and only used to fund Social Security and administrative costs. Instead this money is put into a so-called trust fund and used as a slush fund to create and sustain wasteful government projects.  For example, Social Security dollars financed the National Cowgirl Hall of Fame and Museum in Fort Worth, Texas. Social Security funds were also used to pay for the State Historical Society of Iowa in Des Moines for the development of exhibits for the World Food Prize.[1] Legislation like “The Social Security Lock Box,” would go a long way to ensure that payments to Social Security are actually used to fund Social Security.[2] This legislation would reform Social Security and put retirement savings into a lockbox that no politician could access. This legislation would do what most of the voting public thinks is already done with their payroll tax money.

  1. Replace IOUs with Cash

For the last 30 years, Congress has raided the Social Security Trust Fund. More than over $2.6 trillion has been taken from the trust fund to feather the nests of politicians. In addition, the total unfunded liabilities of the United States government exceeds any reasonable ability to pay.   Beneficiaries need financial security and transparency for Social Security. The Social Security Trust Fund should be funded with real cash and not pledges to pay. Legislation like H.R. 219 introduced in the 112th Congress is needed to make sure the trust fund is funded and not an accounting gimmick. H.R. 219 is needed to change the law so instead of IOUs, the Social Security Trust Fund would hold real money.


  1. Add Trust Fund IOUs to the National Debt

Most Americans have a very hazy picture about the relative fiscal health of the Social Security program. In an effort to educate the public and increase transparency, Social Security reform legislation should include a section that states that any IOUs in the Social Security Trust Fund should be counted as part of the national debt. As Dr. Charles Krauthammer explained in the Washington Post, “In 2012, Social Security adds $165 billion to the deficit. Democrats pretend that Social Security is covered through 2033 by its trust fund. Except that the trust fund is a fiction, a mere ‘bookkeeping’ device, as the Office of Management and Budget itself has written. The trust fund’s IOUs ‘do not consist of real economic assets that can be drawn down in the future to fund benefits.’ Future benefits ‘will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.’[3] By keeping an accurate count of the programs debts this would do more to educate the American public about what is really in the Social Security Trust Fund.


  1. Return Money Taken From the Trust Fund


Legislation is also needed to shore up the solvency of the program by replacing money that has been taken from the trust fund. Congress needs to pass legislation that would replace the IOUs in the trust fund with real assets at a rate of 1 percent or 2 percent of the IOUs every year. At this rate the shock to the U.S. budget and financial system would not be too great. If this money was returned then this would go a long way to ensure the future payment of benefits to senior citizens who paid into the system receive their benefits. If no action is taken to preserve Social Security, then in the coming decades benefits could be cut by as much at 23 percent.[4]


  1. Make Sure Social Security is Paid First

In the event that the debt limit is reached, Social Security payments would be given priority when it comes to government expenditures.

  1. Reform Social Security Disability Insurance

The Social Security Disability Insurance (SSDI) program is taking an ever and ever larger slice of all Social Security spending.[5] In the 1950s SSDI provided benefits only for permanently disabled workers over the age of 50 with a substantial work history. Today the criteria to qualify for benefits has expanded immensely and threatens puts even more pressure on federally financed entitlement programs. Skyrocketing SSDI spending represents the fastest-rising cost for Social Security and not the retiring Baby Boomers. Since 1991disability rolls have doubled and as well as spending on Disability Insurance since 2000.[6]

Federal policymakers. and especially Congress needs to look at ways to reform the program, which is slated to be insolvent in two years. In 1970, the Disability Insurance program could be financed with a payroll tax rate of only 0.8 percent of wages; today, the cost of SSDI has tripled relative to the 1970 level.  Disability benefits now make up 18 percent of all Social Security costs, up from only 10 percent in 1990.[7]  Part of the solution to rising SSDI costs is to tighten eligibility requirements to focus resources on the most disabled individuals, coupled with incentives to employers to keep disabled individuals working.

Social Security is a program worth saving. It is a program that retired Americans and seniors have come to rely on, and one they paid into over a long working history. Politicians would be wise to reform the Social Security program in meaningful ways.

[1] Tanner, Michael “A Real Lockbox for Social Security,” The Cato Institute July 1, 2005 Accessed May 2015

[2] “Social Security Trust Fund- Lock Box,” Citizens League, Accessed May 2015by locking them out of the unified federal budget

[3] Krauthammer, Charles “Charles Krauthammer: Cliff-jumping with Barack” November 29, 2012 “

[4] Matthew, Dylan, “The only game you need to understand Social Security,” The Washington Post June 2, 2013 Accessed May 2015

[5]Roy, Avik,” How Americans Game the $200 Billion-a-Year ‘Disability-Industrial Complex” April , 8,2013

[6] Greszler, Rachel, “Social Security Disability Insurance Trust Fund Will Be Exhausted in Just Two Years: Beneficiaries Facing Nearly 20 Percent Cut in Benefits,” August 1, 2014,

[7] “Drivers of SSDI Growth,” Our Generation August 2012

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