In his August 1953 message to Congress, President Eisenhower referred to retirement systems as “a reflection of the American heritage of sturdy self-reliance which has made our country strong and kept it free; the self-reliance without which we would have had no pilgrim fathers, no hardship-defying pioneers, and no eagerness today to push to ever widening horizons in every aspect of our national life.”
He went on to say that “the Social Security program furnishes, on a national scale, the opportunity for our citizens, through that same self-reliance, to build the foundation for their Security.”
During its 75 years, Social Security has provided essential income support to millions of Americans. In May of this year 43 million seniors and their families received $48 billion in benefits, while 10 million workers with disabilities and their families received $1.5 billion. That said, even in these very difficult economic times we cannot lose sight of the enduring importance of self-reliance.
Social Security benefits were intended to provide a modest income and be supplemented by other savings.
None other than FDR said that “… Social Security can furnish only a base upon which each one of our citizens may build his individual security through his own individual efforts.”
The 75th anniversary of Social Security comes at a time when the program is facing serious financial challenges. According to the Congressional Budget Office or CBO, Social Security will be paying out more in benefits than it will be collecting in taxes this year. By 2016, CBO projects Social Security’s spending will exceed its tax revenue every year going forward.
It is my hope that this anniversary presents an opportunity for us to work on strengthening Social Security’s future for all Americans. While current and near retirees deserve the peace of mind of knowing that they will get their promised retirement benefits, we have a responsibility to ensure that Social Security will be there for younger workers.
The simple fact of the matter is that the money to pay these benefits has been collected from workers in the form of a payroll tax. Workers who, throughout the life of the program, have been asked to pay more, and more, and more.
In 1935 workers were told the payroll tax would never be greater than 2 percent on the first $3,000 of earnings. Since then, Congress passed legislation to increase the tax rate 14 times. Today the payroll tax is 12.4 percent on the first $106,800 of earnings and that amount increases almost every year. Clearly we have learned that raising taxes or increasing the amount of income taxed does not ensure solvency forever. We must find a better way forward.
Today 80 percent of workers pay more in Social Security taxes than in income taxes. And for today’s young workers, they are paying their hard-earned payroll taxes for benefit promises that can’t be fully paid when they will be ready to collect benefits many years from now. No wonder polls show that only 18 percent of young people believe that Social security will be there for them.
Americans want, need and deserve better. We need to look to fair and common-sense solutions. And as we do so it is imperative that we respect the virtue of self-reliance and honor the legacy of hard work that has distinguished our great nation as the land of opportunity.
I have long been a champion of empowering Americans with practical retirement security solutions. Whether it meant working with then President Clinton to eliminate the earnings penalty seniors paid if they chose to work in retirement or advocating phased retirement for older employees who wanted to collect a pension and a paycheck from the same employer in the recent pension reform law, I have been willing to roll up my sleeves and do what’s right for America.
Clearly, the time is now when leaders on both sides have expressed a sincere desire to work together to get something done – for the sake of our economy and Americans’ financial security.
Americans are looking to us to rise above politics and work together on a bipartisan basis to find solutions for Social Security’s future. But we should do so without raising taxes. We need to start that process today.