I come to the floor today as a member of the Senate Finance Committee, which has jurisdiction over Social Security, and to remind everybody, because everybody knows, or better know, the Social Security primary trust fund will be depleted in just six years.
As a result, come late 2032, the program will only have enough income from the payroll taxes to pay 78% of benefits due.
That surplus that has built up since a Republican president, [Ronald Reagan], and a Democrat, then-Speaker Tip O’Neill, sat down and said, “we can’t let anything bad happen to Social Security.”
So, they put a plan together that passed almost unanimously in this United States Senate.
I presume those two gentlemen, bipartisan they were, that they thought it may only extend the program for 20 years or something. But, as we see now, they had a plan that built up a surplus for the next 50 years, and that runs out [in] 2032.
In other words – to emphasize – unless Congress acts quickly, retirees will see a 22% cut in their benefits, about the same as what Reagan and O’Neill saw happening in 1983.
So, this statistic alone should motivate the Congress to act expeditiously to ensure no disruption of benefits occurs. Unfortunately, Congress has a tendency to put off action until too late and at the last moment.
This is never the best approach. But, with respect to addressing Social Security’s funding shortfall, it poses [a] serious risk not only to the tens of millions of retirees, but also a risk to the national economy.
As a recent Mercatus Center paper says, waiting until the last minute to act on Social Security puts this vital program on a collision course with the nation’s growing fiscal crisis.
The longer Congress waits to act, the more likely it is that any solution to Social Security will lean heavily on debt financing to bridge the funding gap, and that’s how it’s tied to the entire national economy.
So, come 2032, the nation will already have outstanding debt larger than at any time in the nation’s history relative to the size of our economy.
Flooding the bond market with trillions of dollars in new debt in short order then risks setting off a chain of events leading to a fiscal crisis.
Bond markets are likely to demand higher interest [payments] to absorb all the national debt.
In other words, congress needs to act in the same way that Reagan and Tip O’Neill acted, in a bipartisan fashion, in 1983 to preserve Social Security.
A bigger problem faces us today, and we should have a bipartisan agreement in this town, including a president who wants to get us Social Security on a financially sound basis.
