I’ve been reading up on the 2024 Social Security Trustees Report, which can be found at SSA.gov. It contains a bit of good news: Thanks to a stronger economy based on wage and job growth, more money than expected is being contributed to the Social Security Trust Fund. This will delay any benefit reductions until 2035.
But the bad news is still really bad: Once the fund is exhausted, beneficiaries can expect an estimated 17% benefit reduction. To be clear, depletion of the fund will not abruptly put an end to Social Security, since continuing FICA payroll taxes will pay benefits at a reduced rate. Still, can seniors afford to pay their bills with a 17% cut in benefits?
What are the solutions to avoid reductions? And does either major political party have a plan to keep benefits off the chopping block?
I asked Tim Sheehy, candidate for U.S. Senate, at a recent meet-and-greet in Whitehall what the Republican plan is for saving Medicare and Social Security. He implied that beneficiaries could remain on the programs after the trust fund is drained. Mr. Sheehy told me the goal should be to privatize both programs.
Thanks for nothing, Tim. In order to achieve privatization, it’s obvious to me that all that needs to be done is nothing. Doing nothing will result in Social Security benefit reductions and the end of Medicare — which I believe is exactly what the Republican Party wants. Based on their inaction so far, I perceive the Republican Party has every intention of letting both programs fail.
But doing nothing is not a plan. And there are some better alternatives.
Here’s one: Currently, FICA withholding for both programs is capped at $168,600. That is, income above the cap is not taxed. The Democrats’ plan is to continue FICA payroll tax withholding up to $168,600. Income from $168,600 to $400,000 would not be taxed, but income above $400,000 would be subject to FICA withholding. This plan, if enacted, would extend the trust fund solvency to well past 2035.
As far as saving Medicare, the Inflation Reduction Act has enabled Medicare to negotiate the costs of a few medications with pharmaceutical companies. You can read more about this at CMS.gov. Medicare is the largest purchaser of prescription drugs in the world. The Medicare program could save hundreds of billions of dollars if it were to use economies of scale and negotiate prices for all its drug purchases. Drug cost savings combined with cracking down on Medicare fraudsters in the private sector could produce enough savings to allow Medicare part B to cover more than 80% of seniors’ medical costs — the level at which it is currently capped.
Social Security is one of the solid foundational bedrocks of our society. It has been there for all of us who have paid into the system for the last 85 years. In all of that time it has never missed a benefit payment. Social Security is not an unearned entitlement. Social Security is not a Ponzi scheme. Social Security is an earned benefit bought and paid for through payroll withholding taxes.
And now, it is time for all Americans, including the rich, to pay their fair share into this essential program which keeps millions of seniors out of poverty. For seniors, imagine what your life would be like without Social Security benefits and Medicare coverage. Imagine the additional burden placed on family members who would now have to care for senior loved ones without Social Security and Medicare.
So, this November, you can vote to save Social Security and Medicare, or you can vote Republican so they continue to cut taxes for the rich. Whatever happens, seniors shouldn’t have to pay the price.
Don Lepinsky lives in Whitehall.
