Social Security just turned 75, and all across the country, people and senior organizations are celebrating this enormous achievement. Before President Franklin Roosevelt signed the law on August 14, 1935, about half of the senior citizens in America lived in poverty. That began to change on January 31, 1940, when the first monthly retirement check, for $22.54, was issued to retired legal secretary Ida May Fuller of Ludlow, Vt.
Today, more than 52 million Americans, including over 124,000 Vermonters, receive benefits. For three quarters of a century, Social Security has been a great success doing exactly what it was designed to do. During that entire period not one American who has been eligible for Social Security has failed to receive benefits they were entitled to receive. That’s a pretty good record. Today, Social Security not only provides retirement benefits to seniors, it provides support for the disabled and widows and orphans.
Sadly, despite its enormously successful record, Social Security has in recent years become a political football. For ideological reasons there are those in Congress who believe that government should not be involved in providing benefits to seniors or the disabled. Rather, they believe in the privatization of Social Security and that workers should, if they want, invest in retirement programs administered by Wall Street and the private sector. Others are arguing that “Social Security is going bankrupt” and, at the very least, benefits should be reduced and the retirement age should be raised to 70.
Let me make it very clear that I disagree with both of those assertions. First, the Social Security system has been enormously effective and efficient for the last 75 years. It must not be privatized. Working people are entitled to the continued security that the system provides and should not be forced to be dependent for their retirement and basic needs upon the ups and downs of the stock market. Despite the deep recession that we are currently in, not one American on Social Security has failed to receive the full benefits that he/she is entitled to. Just think about what would have happened in the last several years to millions of Americans if Social Security had been privatized and all of their retirement funds had been in the stock market. Secondly, Social Security is not going bankrupt and, with modest adjustments, will be available to our kids and grandchildren.
Despite what you may have seen or heard, the Social Security Trust Fund today has a $2.5 trillion surplus that is projected to grow to more than $4 trillion in 2023. According to the non-partisan Congressional Budget Office, Social Security will be able to pay every nickel owed to every eligible beneficiary until the year 2039. Let me repeat that. According to the people who have studied this issue most thoroughly, Social Security will be able to pay out all benefits for the next 29 years. At that time, in 2039, it will be able to pay out only 78 percent of benefits. What that means is that while the system is strong today and for many years to come, it’s important that we make some changes soon so that Social Security remains strong and solvent for the next 75 years. And there’s a pretty easy way to do that.
According to the Congressional Budget Office, if the Social Security payroll tax was applied to all income, Social Security would be solvent for the next 75 years. Right now, because of the cap on income subject to Social Security payroll taxes, someone who earns $106,800 a year pays the same amount into Social Security taxes as a billionaire. That’s wrong and unfair and must be changed. Simply applying the Social Security payroll tax to all incomes would correct this inequity and bring in enough funds to keep the system strong for the next 75 years.
In an August 6 letter to the National Commission on Fiscal Responsibility and Reform, Rep. Peter DeFazio and I suggested making the wealthiest Americans pay the same Social Security payroll tax as the rest of us. As we wrote in this letter, “This revenue boost eliminates any reason to cut Social Security benefits. We must reaffirm our commitment to one of the greatest legislative accomplishments without privatizing Social Security, reducing benefits or raising the full retirement age.”
The reason that we have to protect and strengthen Social Security is pretty obvious. It is a life and death issue for millions of the most vulnerable people in our society. Today, the median income for senior households is $24,000 – reflecting just how much Social Security means to most American seniors. Social Security provides the majority of income for two-thirds of our elderly. For one-third, it provides nearly all their income.
Further, let us not forget that Social Security is vital not only to seniors but to the disabled and widows and orphans. The evidence is very clear that no private insurance plan can compete with the disability benefits offered by Social Security. For a worker in her mid-20s with a spouse and two children, Social Security provides the equivalent of a $350,000 disability insurance policy. Most workers could not obtain or afford similar coverage outside of Social Security.
As we celebrate the successful 75th anniversary of Social Security, now is the time to make sure that our kids and grandchildren will be able to celebrate a similar event 75 years from now.