I want to start by getting something straight. If people say Social Security is “broke" or causing our deficit, they’re either lying or they don’t understand the facts. If I’m wrong, show me your numbers.
Here are the numbers, as I understand them.
Social Security currently has a $2.7 trillion surplus in its Trust Fund, to pay future benefits. That’s because, over Social Security’s lifetime, it has taken in more than fourteen and a half trillion dollars in worker contributions and has earned over a trillion and a half dollars in interest income for a total of well over $16 trillion. At the same time, Social Security has paid out about thirteen and a half trillion dollars worth of earned benefits, plus an operating cost of less than one percent.
Add it up. Social Security has taken in well over $16 trillion but it has paid out just over thirteen and a half trillion.
Social Security is not broke. In fact, it has a current surplus of $2.7 trillion. It’s not the cause of our deficit or our debt. In fact, by law, Social Security cannot deficit-spend. It can only pay out what’s in its Trust Fund. Congress would have to pass a law to allow Social Security to add to our debt.
We do have a projected long-term shortfall, which we should address to ensure that full benefits are paid. But let’s get our facts straight. Even in the unlikely event that Congress didn’t act in time to prevent a shortfall, Social Security still wouldn’t be broke - it would be receiving billions of dollars in worker contributions - and it still couldn’t add to the deficit. It could only pay out what it has on hand.
Over 78 years and 13 recessions, Social Security has always paid benefits on time and in full. It’s not fair to ask seniors, disabled workers, widows, and children to pay for debts run up by two unpaid-for wars and tax cuts for the wealthy.
Social Security benefits are modest, but vital. The average benefit for a retiree is about $1200 a month. Six out of ten seniors rely on Social Security for more than half their income and nearly a third have virtually nothing else to count on. As people get older and begin to outlive their other retirement savings, they begin to rely increasingly on their Social Security paycheck.
Social Security’s all-in-one lifetime benefit guarantee, with full protection against inflation, is unique. It is life insurance, disability insurance and retirement security all rolled into one, all with protection for your family and a guarantee that you won’t outlive your benefits. There’s nothing like it in the private sector.
Switching to the chained CPI would cut Americans’ Social Security benefits by billions of dollars, just when they need them the most.
The chained CPI is a substantial benefit cut for the wrong people - seniors, disabled workers, veterans, women, and middle-income families. Cutting the COLA is particularly harmful to elderly women, who are more likely to be poor in retirement and less likely to have other resources to fall back on. For veterans, the chained CPI could be three different benefit cuts - the chained CPI would cut their Social Security benefits, their veterans disability benefits, and their military retirement pay. For middle-income families, the chained CPI means higher taxes.
The chained CPI cuts also hits seniors with the biggest cuts at the worst time - many years after they retire, when their health costs are rising and Social Security is nearly all they have to live on.
Because there’s a new, additional COLA cut every year, the cut compounds, getting bigger and deeper each and every year. Social Security’s Chief Actuary estimates that the cut would get significantly larger over time for a typical American.
At age 65, a typical middle-income worker would lose about $140 of his or her annual benefit. But by age 75, the annual benefit cut would be $560.
And by the time he or she reaches 85 - the age at which seniors tend to depend much more on Social Security - the annual benefit cut would be almost a thousand dollars a year. And the cut grows to almost $1,400 a year if the individual is lucky enough to live to be 95.
The problem is, seniors need their Social Security the most when they get older. Seniors under 75 spend 58 percent of their income on basic necessities like food, housing and health care. But seniors 75 or older spend two-thirds or more of their income on those basics. At the same time, older seniors rely much more heavily on Social Security to pay the bills. Almost three-fourths of seniors over 80 rely on Social Security for more than half their income, as compared to about 50 percent of those under 69.
It just doesn’t make sense to design a benefit cut that hits seniors, disabled workers, veterans, and widows with the biggest benefit cuts at the time we know they need Social Security the most.
The only way to protect Americans from that kind of targeted benefit cut is to not make it in the first place.
Mr. Chairman, I appreciate you holding this hearing. I hope as we listen to the witnesses, we can all think about what’s right and what’s fair for our nation’s seniors, disabled workers, veterans, widows, and working families.
