For over 75 years Social Security has relied on the strong work ethic of Americans. Workers pay part of their hard-earned wages for the promise of future benefits should they retire, become disabled or die. Seniors, those with disabilities, widows, and their families count on these benefits to be there for them.
Yet according to the recently released Annual Report of the Social Security Board of Trustees, unless we act, Social Security will not be able to keep its promises.
For example, Social Security’s Disability Insurance program will be unable to pay full benefits in 2018. In addition by 2036 tax income will be cover only 77 percent of benefits. The average monthly benefit for a retired worker today is only $1,175, so that’s a potential cut of about $270. That’s real money, especially for those who are getting by on a fixed income.
According to the Trustees, Social Security is already running permanent cash flow deficits. As a result Social Security must rely on general revenues to pay back with interest the Social Security surpluses Washington spent in years past.
Over the next 10 years, Social Security’s cash shortfall will reach $416 billion. To pay its debt to Social Security in these times of record deficits and debt, Treasury will need to borrow more, according to CBO. We do so at our own economic peril.
Today the U.S. borrows 40 cents for every dollar it spends, a good amount of which comes from the Chinese, and sends the bill to our children and grandchildren. The bottom-line is that China and other foreign governments are also financing Social Security.
Families are right to be worried about this country’s economic future. We face great challenges, but I believe in the greatness of this country we call America. We need to make sure this program is safe, secure and sustainable. And let’s be clear: current and near retirees deserve the peace of mind of knowing that they will get their promised retirement benefits. At the same time though we have a responsibility to ensure that Social Security will be there for younger workers.
At the end of the day, Americans want, need and deserve a Social Security program they can count on and a fact-based conversation about how to get there. I look forward to beginning that conversation today and thank our two witnesses for their testimony, which we are about to hear.