Social Security Faces Looming Funding Shortfall, Threatening 20% Benefit Cut by 2034: Congress Urged to Act
Millions of Americans are concerned about the future of their Social Security retirement benefits, as the program faces a significant funding shortfall. Without action from Congress, beneficiaries could see a potential across-the-board benefit cut of at least 20% by 2034. This alarming situation was discussed during a recent Social Security forum held by AARP, a nonprofit organization representing the interests of individuals aged 50 and above.
Social Security relies on income from payroll taxes to cover the benefits it pays out. However, projections indicate that the program’s trust funds will be depleted within the next decade. Once this occurs, immediate reductions in benefits will be inevitable.
The lack of progress in addressing Social Security’s funding challenges has led many Americans to question the commitment of Congress to act. Lawmakers attending the AARP forum, including Republican Sen. Bill Cassidy and Democratic Rep. John Larson, shed light on the obstacles their proposed reform measures have faced.
Sen. Cassidy expressed frustration, noting that President Biden’s unwillingness to act before the next presidential election has hindered efforts. While President Biden has addressed certain proposals, he failed to mention a separate bipartisan plan that had been presented to him, according to Sen. Cassidy.
Rep. Larson has introduced a bill called Social Security 2100, aimed at making benefits more generous. The bill proposes funding the enhancement by increasing Social Security payroll taxes and implementing an additional net investment income tax for taxpayers earning over $400,000. While the bill has garnered significant support from House Democrats, it has yet to advance to a vote.
Sen. Cassidy’s and Rep. Larson’s proposals differ in approach, but both seek to ensure the long-term solvency of Social Security. Sen. Cassidy’s plan involves creating a new Social Security fund by raising $1.5 trillion for investment in the stock market. This fund would help the program keep up with inflation, which typically outpaces returns from Treasury notes. The remaining 30% of Social Security’s shortfall would need to be resolved through bipartisan compromise.
Rep. Larson’s bill focuses on increasing benefits, particularly the minimum benefit, which would help lift 5 million people out of poverty. The proposal also includes a 2% across-the-board increase in benefits and more generous provisions for long-term beneficiaries, widows, widowers, and dependent children who are students.
The current lack of consensus and action on Social Security has left beneficiaries like Alfred E. Mason concerned about the potential impact on their financial security and their families. Mason, who began paying into the program in 1958, emphasizes the crucial need for Congress to take decisive action.
The urgency surrounding Social Security’s funding crisis highlights the importance of finding bipartisan solutions. As lawmakers continue to debate different proposals, it becomes clear that a collaborative effort is necessary to safeguard the program’s future.
In the end, it is up to voters to put pressure on Congress to act swiftly and responsibly to ensure the financial stability of Social Security. The program’s beneficiaries deserve peace of mind, knowing that their hard-earned contributions will provide the support they need in their retirement years.
