1 Social Security 101: The Program and the Problem Social Security University February 19, 2003 Presented by: Michael Tanner, Director of Health and Welfare Studies Andrew G. Biggs, Social Security Analyst The Cato Institute, Washington, D.C. www.socialsecurity.org 2 Challenges Facing Social Security •It‟s going broke: Social Security will begin running payroll tax deficits within 15 years. By 2041, it will be legally and financially unable to pay full promised benefits, resulting in cuts of 25 percent or more. •It‟s unfair: Social Security often discriminates against working women; divorcees; African Americans; and younger Americans. •It hurts wealth creation: asset ownership brings a host of economic and social benefits. Social Security discourages saving by the poor, reducing wealth accumulation and increasing economic inequality. •It‟s risky: workers have no legal right to their benefits, even after a lifetime of contributions. The lack of a legal obligation encourages the government to make promises it cannot keep, and to delay action on reform. 3 What is Social Security? •The Social Security Act was passed in 1935 and the first benefits paid in 1940. •A contributory social insurance program: everyone pays in and everyone receives benefits. Not a welfare program. •Financed by a 12.4 percent tax on wages up to $85,000 (increases annually); the biggest tax most households pay. • Provides retirement, survivors and disability benefits to eligible workers and their families. •The largest government program in the world; takes up almost one-quarter of the total federal budget. 4 Social Security and the Budget Social Security is already the biggest single item in the budget. Without change, it could eat up 29 percent of the budget by 2020, 34 percent by 2030, and 36 percent by 2075. Social Security 23% All other 77% 5 Payments from the Old Age, Survivors, and Disabilities Insurance (OASDI) program Most Social Security benefits go to retirees, but survivors and the disabled make up substantial shares as well. Reform centers on the retirement portion of Social Security. Survivors 19% $81 billion Disability $60 billion 14% $291 billion Retirement 67% 6 How are benefits calculated? • Determine worker‟s “average indexed monthly wage” (AIME). – Index each year‟s past earnings for wage growth. (This effectively pays “interest” at the rate of wage growth, around 1 percent.) Years after age 60 are not indexed. – Select 35 highest earning years and add together. – Divide the sum by 35 (to produce an annual average), then by 12 (to produce a monthly average). • Run the monthly AIME amount through Social Security‟s “bend points.” – Bend points replace 90 percent of the first $592 of worker‟s average indexed monthly earnings, plus 32 percent of earnings between $592- $3,567, plus 15 percent of earnings above $3,567. This produces a “primary insurance amount” (PIA). • For a single individual, the PIA is their monthly benefit. It is also the basis for spousal, disability and survivors benefits. (For more information, see http://www.ssa.gov/OACT/COLA/BenForm.html) 7 Social Security Revenues Most of Social Security‟s revenues come from payroll taxes. A smaller amount is from taxes on benefits, while the trust fund is credited with interest each year. Payroll Taxes $516 Billion General Revenues1 $13 Billion Interest on trust fund2 $73 Billion Total $602 Billion 1 Credited from income taxes on benefits. 2. No actual cash changes hands. Interest to the trust fund‟s bonds is paid by issuing new bonds. 8 “Pay-as-you-go” Financing •Social Security is a “pay-as-you-go” system. Contributions from today‟s workers are not saved to pay their retirement benefits, but immediately used to pay benefits to today‟s retirees. •A pay-as-you-go program can begin paying benefits quickly. (System started in 1935, first benefits paid in 1940). •Pay-as-you-go financing provides big windfalls to early retirees, who only paid in for a few years. (First retiree, Ida May Fuller of Ludlow, Vermont, paid $24.75 in taxes; lived to age 100 and collected $22,889 in benefits.) 9 Downsides of Pay-as-you-go But a system that transfers money rather than investing it is very sensitive to the number of people paying in vs. the number of people collecting: the ratio of workers to retirees. Demography is turning these ratios against Social Security. •People are having smaller families, meaning fewer new workers paying into Social Security. •Seniors are living longer, and collecting for more years. •And the Baby Boom generation is about to retire… 10 Increasing life expectancies mean 88 more retirees to support… Total life expectancy for individual reaching age 65 Future retirees will live years longer than 86 today‟s 65-year-olds, and collect thousands more in benefits. 84 82 80 Male Female 78 76 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2010 2015 2000 2005 2020 2025 2030 2035 2040 11 …And low birth rates mean fewer new workers to support them Fertility Rate (number of children per woman) 4 3.5 The Baby Boom 3 Birth Rates Continue at Low 2.5 Levels The Baby Bust 2 1.5 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2010 2015 2000 2005 2020 2025 2030 2035 2040 12 Worker-retiree ratio falling When the ratio of workers to retirees falls, each worker must bear a greater financial burden. As a matter of simple math, this will raise the required tax rate: from around 6 percent in 1960, to 10.5 percent today, to around 17 percent in 2030. 1960: 5.1 to 1 Today: 3.4 to 1 2030: 2.1 to 1 13 Social Security taxes are already high… The Social Security payroll tax is 12.4 percent of wages. That‟s… •An eighth of the average worker‟s total wages… •The biggest tax the average household will pay. That‟s enough to pay… •Six months rent on a $700 per month apartment, or… •A full year of student loan payments at $350 per month, or… •A keg of Budweiser every weekend (plus chips!). And if today‟s payroll tax seems high, wait „til you see tomorrow‟s! 14 …and without reform, costs will reach 20 percent of payroll. 22 Today, Social Security is running a 20 surplus. But deficits will begin in 2017 and grow ever-larger. Percent of Taxable Payroll 18 16 14 12 Income Cost 10 2002 2008 2014 2020 2026 2032 2038 2044 2050 2056 2062 2068 2074 2080 15 Social Security‟s deficits grow with each passing year $25 The date of trust fund exhaustion has $23.87 75-year cash flow deficit, in trillions of $24 moved back several years, to 2041. But each year, Social Security‟s long-term $23 deficit has grown by trillions. $21.74 $22 $21.14 $21 $2002 $20 $18.71 $19 $18 $17 1999 2000 2001 2002 Year of Trustees' projections 16 Social security will dominate government spending. 40% Social Security's Share of Federal Spending 38% 36% 34% Many Democrats favor reform 32% because they fear that Social 30% Security will squeeze out other 28% programs they care about. Social 26% Security, Medicare and other senior-related programs could 24% swallow the entire federal budget 22% by mid-century. 20% 2000 2006 2012 2018 2024 2030 2036 2042 2048 2054 2060 2066 2072 Source: 2001 Trustees Report. Federal spending is assumed to maintain current share of GDP. 17 But won‟t the trust fund help pay benefits? Technically, the government bonds in Social Security‟s trust fund will help pay full benefits until 2041. But the Social Security trust fund is merely a debt the government owes to itself. And the only way to turn those IOUs into cash is to raise taxes, cut spending, or borrow. Those are the same choices we‟d face if there were no trust fund at all! The fund cannot put off the need for action. That is why non-partisan analysts agree that Social Security‟s financing problems begin with payroll tax deficits in 2017, not when the trust fund runs out in 2041. 18 Experts say: Trust fund can‟t pay benefits The Congressional Budget Office: “Although there is no money in the Treasury to pay for future obligations, the obligations to people eligible for Social Security benefits are real. And most important, those obligations are a direct result of federal law, not a consequence of whatever may or may not be credited to the Trust Funds. In particular, the size of the balances in the Social Security Trust Funds – be it $2 trillion, $10 trillion, or zero – does not affect the obligations that the federal government has to the program‟s beneficiaries. Nor does it affect the government‟s ability to pay those benefits.” (CBO Director Dan L. Crippen and Deputy Director Barry B. Anderson, testimony before the House Ways and Means Committee, Feb. 23, 1999) Rep. Robert Matsui and Sen. Bob Graham: “Trust Fund reserves are growing at the pace of a billion dollars a week. But these billions won‟t be available to the next generations of America‟s retirees. As quickly as the surpluses amass, they are being siphoned off to help finance the deficit. Bluntly put, the federal government is spending more than $1 billion a week of the Social Security surplus as though it were general revenues. All that the Trust Fund gets for these expenditures are chits from the U.S. Treasury. (The Washington Times, September 12, 1990) Social Security‟s Public Trustees: While the bonds held by the trust funds are assets from the vantage point of the Social Security and Medicare programs, from the viewpoint of the unified budget they are liabilities of the U.S. Treasury. No one doubts the U.S. Government will honor the bonds. But since the U.S. Treasury is the ultimate payer of the programs‟ benefits and the trust fund assets are also debts of the U.S. Treasury, neither the interest paid on the bonds, nor their redemption, provides any net new income to the U.S. Treasury. When annual revenues from earmarked taxes for Social Security and Medicare begin to fall short of annual expenditures, such shortfalls inevitably must be made up by increased taxation, increased borrowing (i.e., the sale of more U.S. Treasury bonds to the public) and/or a reduction in other government expenditures. This fact is the basis for the view that trust fund assets have no "real" economic value. From a unified budget viewpoint, the trust fund surpluses are a budget accounting device and make no meaningful contribution to funding future Social Security or Medicare expenditures. They simply reflect the fact that in the past, surplus Social Security and Medicare revenues have been used by the U.S. Treasury to fund other government programs or to reduce outstanding Federal debt.” (John Pal mer and Thomas Saving, Social Security Public Trustees, 2002) 19 Annual repayments to the fund will equal the size of whole cabinet departments The question isn‟t whether we‟ll honor the trust fund‟s bonds – no reform legislation in existence would default on them – but how we‟ll do it. The “how” is to raise taxes, cut spending or run a budget deficit. •By 2018, Social Security‟s cash flow deficit would equals Head Start and the Special Supplemental Nutrition Program for Women, Infants and Children (WIC). •By 2021, the shortfall is equivalent to the Departments of Education, Interior, and Commerce and the Environmental Protection Agency, in addition to those listed above. •By 2035, Social Security‟s cash needs equal all of the above, plus NASA, the Departments of Veteran‟s Affairs, Energy, Housing and Urban Development (HUD), Justice and the National Science Foundation. And this is all before the trust fund runs out. In the end, the federal budget would consist of little more than a pension plan with an army. 20 We can‟t borrow our way out… • Some people think we can borrow to get Social Security “over the hump” of Baby Boomer retirements. • But Social Security‟s problems continue and grow larger even after the Boomers are gone. • Borrowing doesn‟t reduce Social Security‟s deficits, it is just a stealth tax increase on our children and grandchildren. That‟s what Social Security reform is supposed to avoid. • If we borrowed to cover Social Security‟s deficits, the debt would exceed $7 trillion (in today‟s dollars) by 2040, $14 trillion by 2050, and over $47 trillion by 2075. This would be larger than the national debt at the end of World War II (as a percent of GDP) and would cripple the US economy. 21 The solution: a funded system •A funded system invests contributions from today‟s workers to pay their future benefits. •A funded system‟s return equals the return on economic capital. (Only part of this return goes to stock-holders; the rest flows to the government as taxes.) •The return to capital averaged 8.5 percent after inflation from 1960 to 1996. Social Security‟s “pay-as-you-go” return (labor force growth plus wage growth) averaged just 2.7 percent during that period. •A funded system can pay the same benefits at just one- quarter the cost of a pay-as-you-go program, reducing the need for tax increases or benefit cuts. •Funding can be done centrally by the government or individually through personal accounts. 22 Return to Capital and Paygo Return 12 Pre-Tax Return to Capital. Average: 8.5 Percent 10.3 10 Social Security "Paygo" Return. Average: 2.7 Percent Real annual return, in percent 8.6 7.9 8 7.1 6 3.7 4 3.1 2.2 1.6 2 0 1960-69 1970-79 1980-89 1990-96 23 Why does a capital-based system work? •In economics, “capital” means the tools, factories and machines that are used produce goods and services. •When there is more capital in the economy, workers become more productive, increasing economic output. •With increased economic output we can support growing populations of seniors without raising taxes on workers. •The details are complex but the principle is simple: A funded Social Security system aims to strengthen the economy through increased saving and investing. A larger economic pie means bigger slices for everyone. 24 So what‟s the catch? •A funded system pays higher benefits at lower cost than the current unfunded program. But to get to funded system, we have to put up the funds. •Funding means higher costs in the short term. That‟s true whether we fund through personal accounts, government investment of the trust fund, or by retiring existing public debt. Personal accounts are no more “expensive” than any other means of pre-funding Social Security. •Moreover, “transition costs” bring “transition benefits” – reduced burdens on workers, higher benefits for retirees, a stronger economy and higher wages. •Fund transition with existing government spending. Cut corporate welfare, reduce pork, slow the growth of other programs. This money would be used more productively as private capital, and would channel the gains to something important: Social Security. 25 Should the government invest? Government investment of the trust fund in stocks was supported by the Clinton administration and by many opponents of personal accounts. But the public is opposed: In the latest Cato Institute/Zogby International poll, likely voters supported personal accounts over government investment by 62 to 24 percent. “Raids” could continue: the current trust fund has been “raided” to pay for other programs, and a central fund of stocks could be too. Personal accounts are tougher to raid, a stronger “lock box.” Political risks: Many fear that federal ownership of American companies opens to the door to political control over the economy, and could bias investment decisions to help or harm particular firms. 26 Greenspan and Gore Oppose Government Investment of the Trust Fund “I think it's very dangerous... I don't know of any way that you can essentially insulate government decision-makers from having access to what will amount to very large investments in American private industry... I know there are those who believe it can be insulated from the political process, they go a long way to try to do that. I have been around long enough to realize that that is just not credible and not possible. Somewhere along the line, that breach will be broken.” Alan Greenspan, Senate Banking Committee, July 21, 1998 “The magnitude of the government‟s stock ownership would be such that it would at least raise the question of whether or not we had begun to change the fundamental nature of our economy. Upon reflection, it seemed to me that those problems were quite serious.” Al Gore, New York Times, May 25, 2000 27 How would personal accounts be set up? •Workers could invest part or all of their payroll taxes in accounts holding diversified stock and bond mutual funds. Higher returns on market investments would increase expected benefits for the worker. •Workers choosing accounts would give up part of their traditional benefits, reducing pressure on the current system‟s finances. •At retirement, workers could purchase an annuity or take gradual withdrawals of their money. •If the worker died before the account was exhausted, the remainder would pass onto his spouse, children or a chosen charity. Greenspan Supports Personal Accounts "I do think that the notion of moving some funds into private accounts is the appropriate thing to do. And I think we're going to be moving in that direction inexorably because of the way the economy is developing; that is, more out of defined benefit into defined contribution, with, presumably, some form of safety net for individuals who turn out to have not had the best of experiences." Senate Budget Committee, January 2001 “My own preference is strongly in the direction of moving towards a privately financed system because I believe that's the quickest way to get to full actuarially sound funding and get programs which will work… In my judgment, [restoring Social Security to solvency] can be most effectively be done in the context of gradually moving toward a private system.” Senate Budget Committee, January 1998 29 Insolvency isn‟t the only problem… Social Security‟s benefit structure can… • Discriminate against working women and two-earner couples • Deny benefits to many divorced individuals • Disadvantage minorities and low-wage workers with shorter life expectancies, increasing inequality of wealth over generations • Discriminate against younger workers, who will receive low returns • Deny workers a legal right to their benefits. Personal accounts can help address these problems… 30 Social Security and the Modern Family Social Security‟s benefit structure is stuck in the past: it assumes that husbands will earn the wages while wives will remain at home, and it punishes couples who do not accord with this 1930s norm. •Dual entitlement rule: A spouse is entitled to her own benefits or benefits equal to one-half of the higher earning spouse – but not both. •As a result, 63 percent of working women receive no additional benefits for the taxes they pay . They could have received just as much by not working and simply accepting the spousal benefit. •The dual entitlement rule is one of the most regressive aspects of Social Security. According to the SSA, a high- income single earner couple receives higher returns from Social Security than a low-income single worker or dual-earner family. 31 Identical Earnings Can Mean Very Different Benefits Tom and Beth Green (age 35) Mike and Sue Smith (age 35) Tom earns twice the average wage, Mike and Sue both work and each Beth doesn‟t work outside the home. earns the average wage. •The Greens‟ monthly benefit: •The Smiths‟ monthly benefit: •$2098 for retirement, plus $1049 •$1447 for Mike plus $1447 for Sue, spousal benefit = $3147 total. equals $2894 total. •That‟s $253 less per month than the Greens, who have the same household income. •If Tom dies, Beth receives $2098 •If Mike dies, Sue receives $1447 in monthly in widow‟s benefit, 66% of the widow‟s benefit, 50% of the Smith‟s initial benefit. Sue receives just 69% Greens‟ initial benefit. of Beth Green‟s benefit, even though Sue paid into the system while Beth did not. Source: Urban Institute 32 Personal Accounts and Marriage Under a system of personal accounts •Both husband and wife would have personal accounts of their own. •Any work performed would increase the account balance and raise benefits at retirement. •Single workers and dual-earner couples would no longer be discriminated against. 33 Social Security and Divorce To qualify for spousal and survivor benefits a marriage must last 10 years. But marriages ending in divorce have a median length of just 7 years, and fully one-third of all marriages end prior to the 10 years needed for benefit eligibility. •George and Rita Ball are divorced after 10 years and 1 day of marriage. Rita is entitled to full spousal and survivors benefits based on her ex-husband‟s earnings. •John and Judy Hill end their marriage after 9 years and 11 months. Judy is entitled to no benefits based on her husband‟s earnings. If she did not work outside the home, she may have no entitlement to any benefits or protections. The Urban Institute says: Social Security “grants people who signed divorce papers after being married nine years and eleven months hundreds of thousands of dollars less than those who waited another month to divorce.” 34 Personal Accounts and Divorce Under a system of personal accounts… •Couples who divorce would split their account assets accumulated during their marriage 50-50. •There would be no time requirement. Even spouses divorcing prior to 10 years would receive benefits based on their spouse‟s personal accounts. •Example: A woman marries at age 25 to average earner and divorces just prior to 10 years. Her share of account assets, if left to accumulate until retirement, could result in lump sums ranging from $10,000 to $40,000, increasing her monthly income by $55 to $215. (Based on reform proposals from President‟s Commission.) 35 African Americans and Social Security Shorter Life Expectancies: One-third of black males will not live to collect retirement benefits; others collect for fewer years. As a result, African Americans receive nearly $21,000 less from Social Security over their lifetimes than whites with identical incomes and family profiles. This neutralizes much of Social Security‟s progressivity. Lower Incomes: 75 percent of African Americans receive most of their retirement income from Social Security; 37 percent receive all of it (that‟s double the percentage for whites). Since Social Security can‟t be passed on, inequality of wealth is increased. Spousal Benefits: In 1998, only 36 percent of black females were married (versus 58 percent of whites), meaning that most black women will be ineligible for spousal benefits. Divorce: Nearly half of all marriages among African Americans are disrupted by divorce in less than 10 years, contributing to ineligibility for spousal benefits. A greater number of African American women do not remarry after divorce. Disability: African Americans do rely disproportionately on Social Security‟s disability protections, but personal accounts can make the retirement program more progressive and fair. (Many personal account plans also make the disability program more progressive.) Personal accounts and African 36 Americans •Personal account plans increase Social Security‟s progressivity versus the current system, often substantially so. •Workers who die prior to retirement would have an inheritance to pass on, in addition to Social Security‟s traditional survivors benefits. •Bequests important to African Americans: The median U.S. household owned $17,400 worth of financial assets in 1998, including retirement accounts. For African American it was only $3,060. •Personal accounts would allow spouses, children and the community to retain wealth, disproportionately benefiting African Americans and reducing wealth inequality. 37 Younger Americans Disadvantaged Non partisan analysis shows: the popular Social Security program that paid high benefits with low tax rates no longer exists. Most younger Americans will receive lower returns than if they had Real annual return invested in risk-free government bonds. Low returns mean lower retirement incomes, less security, greater poverty in retirement. Source: Dean R. Leimer, “Cohort-Specific Measures of Lifetime Net Social Security Transfers,” Social Security Administration. 38 Social Security‟s Return •Calculating Social Security‟s rate of return for individuals is complex. But calculating the system‟s overall return is relatively easy. •Social Security‟s return = the rate of growth of the labor force + the rate of growth of wages. More workers, earning higher wages, means more money to distribute to retirees. •From 1960 to 1996, Social Security‟s pay-as-you-go return averaged roughly 2.7 percent after inflation. (Early retirees earned higher returns, because they paid taxes only for a few years.) •Over the next 75 years, Social Security‟s return will be only around 1.4 percent. That‟s not nearly enough to pay the benefits it has promised. 39 Real Rates of Return Falling for All Retirees (Assumes No Change in Law, Retirement at Age 65) Birth Year Single Male Single Single Two-Earner (Medium Female Earner Couple wages) (Medium Couple (Medium/ wages) (Medium Low wages) Wages) 1970 1.13 1.59 3.42 2.24 1980 0.91 1.36 3.31 2.08 1990 0.88 1.29 3.14 1.97 2000 0.86 1.25 3.02 1.88 Source: May 27, 2001 calculation by the Social Security Office of the Actuary 40 Personal Accounts and Younger Americans Young Americans are the strongest supporters of personal accounts: 75 percent support in July 2002 Zogby poll. Even reform opponents‟ polls have found support: 69 percent of Americans under 35 supported plan to require investment in personal accounts. (2030 Center, 1999 poll; note that most account plans are optional.) Reform would pay young Americans higher benefits at lower cost than the current program. Example: The SSA found that a low- wage worker retiring in 2052 could expect benefits 26 percent higher under one of the President‟s Commission‟s personal account plans than under the current program, even if both plans received the exact same amount of funding. An average-wage worker could expect 16 percent higher benefits. 41 Property Rights Individuals have no legal right to their benefits. •Workers pay a tax based on their wages and retirees receive a benefit based on their wages. However, there is no direct link between taxes paid and benefits received, and the tax and benefit formulas can (and have) been changed at any time. •For example, the 1977 and 1983 reforms increased taxes and made large cuts in future benefits. What does this say about the government “guarantee” of benefits? •The lack of property rights gives “flexibility” to the government but denies security to workers and retirees. •It also encourages politicians to make promises today that they may not be able to keep tomorrow. 42 The Supreme Court on Property Rights “To engraft upon the Social Security system a concept of „accrued property rights‟ would deprive it of the flexibility and boldness in adjustment to ever changing conditions that it demands.” Flemming v. Nestor (1960) “The proceeds of both employer and employee taxes are to be paid into the treasury like any other internal revenue generally, and are not earmarked in any way.” Helvering v. Davis (1937) 43 The SSA on Property Rights “There has been a temptation throughout the program‟s history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit.” However, “Congress clearly had no such limitation in mind when crafting the law…. Like all federal entitlement programs, Congress can change the rules regarding eligibility--and it has done so many times over the years. The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments.” Source: www.ssa.gov/history/nestor.html (emphasis added). 44 Personal Accounts and Property Rights Unlike the current program, personal accounts would give workers a true legal property right to their contributions and benefits. Social Security would no longer be a political football. Workers and retirees would not have to worry that politicians would cut their benefits. As property, personal account assets could be passed on to a spouse, children or a charity. Unlike the current system, contributions to personal accounts couldn‟t be “raided” to pay for other programs. Personal accounts are the ultimate “lockbox.” 45 Personal accounts are… •Flexible: Your money works for you, whether you‟re working or staying at home. •Equitable: Resolve many of the inequities concerning divorce, dual-earner families, widow‟s benefits, African Americans. •Empowering: Low earners could create wealth without paying higher taxes, and could pass that wealth on to their heirs. •Voluntary: Personal accounts would be voluntary – it‟s your money, it‟s your choice. No one would be required to invest in the stock market. •Most of all, they‟re yours: you would own the account, you could control it, and no politician could raid it to pay for other programs. When you die, you could pass it on to your heirs. 46 Social Security reform should… Increase economic growth: Smaller numbers of workers will support larger populations of retirees. By raising national saving, Social Security reform can boost worker productivity and increase economic growth . •Increase personal control: Reform should give workers true legal ownership of their retirement savings, prevent the government from “raiding” Social Security, and give all Americans the opportunity to build wealth and pass it on. Increase fairness: The current system can be unfair to African Americans, who often do not survive to retirement age; to working women, who often do not receive spousal benefits; to divorced workers, who are often denied benefits; and to the young, who must pay high taxes into a system that will be insolvent by the time they retire. Reform should correct these flaws so all Social Security participants feel they are treated fairly. 47 Where to from here? There is no easy solution … but some solutions are a lot easier than others. Doing nothing is not an option. Without action, benefits will eventually be cut by over 25 percent. If you don‟t have a reform plan, you‟re for benefit cuts, because that‟s what the law prescribes. Every year that passes increases the cost of reform by hundreds of billions of dollars. We must act soon! Every congressman – and every American – needs to learn about Social Security, the problems it faces and the solutions that have been proposed.
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