The already unstable position of the American social security program has become further endangered by the economic shock of the COVID-19 coronavirus pandemic, as less money coming into the fund and more people seeking benefits early have destabilized the program even further. This is according to a story published at Gray Television’s Washington News Bureau.
While the social security trust fund is making up the difference between the amount of money that the program brings in and the amount that is being paid out to beneficiaries, such an arrangement is not sustainable and puts the program at existential risk as Americans continue to look for sources of cash during the economic shock. One source for qualifying beneficiaries is social security.
“We don’t know how severely this will impact the finances of the program,” said Nicko Gladstone, a research analyst with the Bipartisan Policy Institute to Gray. “But we know that it will cause quite a hit.”
According to research analyzed by Gladstone and his peers, the trust fund may only have 10 years before it will have to resort to making smaller payments to beneficiaries. As the pandemic continues its economic toll, that shock is leading some seniors to put off their plans to take their social security payments later in life and to start taking them now, the story reads.
On Thursday, President Donald Trump and Senate Republican leaders backed off of a proposal to institute a payroll tax cut; the primary funding source for the social security program.
Such a cut would likely have caused further problems for social security’s solvency, according to Senate Finance Committee Chairman Chuck Grassley (R-Iowa). Cutting the payroll tax would instigate “a public relations problem” due to the damage such a cut would do to social security, Grassley said to The Hill.
Much of the problems underlying the shaky ground that social security increasingly finds itself on is the shifting demographics in the American population, the story reads.
“Americans are living longer lives than when the [social security] program began in the 1930′s,” the story reads. “And, with baby-boomers retiring, there are not enough workers in younger generations to cover their benefits – at least under the current tax structure.”
When the social security program faced similar existential challenges in the 1980s, the problem necessitated a bipartisan solution which made difficult choices, according to Senator Patrick Leahy (D-Vt.) to the Gray’s.
“I don’t have the perfect answer,” he said to the outlet.
One proposal that has been floated is a raising of the retirement age, but such an idea is a “non-starter” according to Max Richtman, the president of the National Committee to Preserve Social Security and Medicare.
“Living longer does not mean you can work longer,” Richtman told Gray’s.
Read the story at Gray’s Washington News Bureau.