The Social Security Trust Fund will run dry by 2033. At that point, incoming payroll tax revenues will be able to pay just 79% of scheduled benefits.
To their discredit, many members of Congress have been indifferent to this looming shortfall — and now propose to make matters worse.
The Senate is poised to pass the inaptly named Social Security Fairness Act, which would repeal reforms implemented in 1983 regarding the safety net program and government workers who enjoy lucrative public-sector pension benefits. In essence, the proposal will overhaul the benefit formula to raise monthly payments for state and local government employees who spent a portion of their career in the private sector.
If the bill is passed, “government workers who spend some years with private employers would get a relatively larger benefit than similar-earning worker who spend their entire careers in private industry,” The Wall Street Journal notes. In addition to the boosted Social Security benefit, these public employees would also receive their generous lifetime pension payments, courtesy of the taxpayers.
This proposal — a sop to government unions — will cost nearly $200 billion over a decade.
“It is truly astonishing that at a time when we are just nine years away from the trust fund for the nation’s largest program being completely exhausted, lawmakers are about to consider speeding that up by six months,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “And add on top of that another $200 billion in new borrowing as a result. We are racing to our own fiscal demise.”
She went on to say that the legislation “does nothing to address the windfalls they are intended to eliminate — instead, it just restores windfalls for folks who have other government pensions. What an incredulous set of events.”
The Social Security Fairness Act would bring us closer to the looming cliff while more quickly forcing the inevitable benefit cuts that will arise from insolvency.
The bill sailed through the House with widespread support from Republicans more intent on currying favor with police, firefighter and teachers unions than living up to their repeated commitments to fiscal responsibility. At least 13 GOP senators have also expressed support for the proposal, making the math easy for Senate Democrats.
As reason.com’s Eric Boehm notes, even if Congress believes the change is necessary, the proper time to move forward “would be as part of a complete overhaul of Social Security aimed at solving the looming insolvency issue and providing retirement security for all Americans — including those who would prefer to opt out of Social Security entirely.”
The Social Security Fairness Act is a colossally bad idea.
— From Tribune News Service
