“Social Security needs reform.” Maybe you’ve heard that one before. Reforming the social welfare state has been a talking point for more than forty years. Right now, there’s inertia on both sides of the aisle, and the political parties would rather punt than solve the problem. However, doing nothing is unsustainable, so it’s important to consider reform and what our faith teaches.
What is Social Security?
Social Security is a government program providing a retirement safety net for Americans. It also aids “workers who develop disabilities, and families in which a spouse or parent dies,” according to the Social Security Administration (SSA) website. The program was enacted in 1935 and signed into law by President Roosevelt.
The program is funded through payroll taxes – about 6.2% of a worker’s income – and then the SSA puts that money into a trust fund. The trust fund then pays current recipients of Social Security assistance. When a worker retires, he or she receives a benefit based on number of working years, income, and when he or she chooses to receive the benefit.
Solvency
Much of the agita about Social Security revolves around the solvency of the trust funds—there are two of them. The first trust fund, used for those with disabilities, is projected to be solvent. The second, used to pay retirees, isn’t. Vonda VanTil, a Public Affairs Specialist who represents the SSA in Michigan told The Drew Mariani Show, “The old age survivors one is projected to be depleted in 2034.” The projection, VanTil said, is based on a composite assumption of an optimistic and pessimistic actuarial calculation.
Why is Social Security in Crisis?
There are several factors contributing to the crisis. “Birth rates is obviously one that contributes to the social security ebbs and flows,” VanTil told Drew. There are more Baby Boomers retiring now than there are workers to fund the system.
Another issue is life expectancy. The Congress leaders in the 1930s didn’t expect Americans to live into their 80s or even past into their 100s. This puts an added burden on the program because, as VanTil said, “they’re pulling from the system for a much longer period of time.”
Reforming the Program
Many of the proposals to fund Social Security involve raising taxes, cutting benefits, or spurring private investment. For example, Congress could raise the payroll tax used to fund the program or remove the cap on taxable income. However, the American Enterprise Institute does not think that solution would be effective. “Eliminating the taxable-earnings cap would do little to address Social Security’s shortcomings — it may even further undermine the program by weakening national productivity growth, savings, and labor-force participation.”
Private investment accounts have long been proposed to fix Social Security. Such accounts would allow workers to invest their Social Security funds in the market which typically yields are higher rate than the public trust. Of course, markets are volatile, but the Cato Institute showed in 2012 that a worker retiring in 2011 who invested “the employee half of the Social Security payroll tax over his working lifetime, he would have retired with more income than if he relied on Social Security.”
Catholic Church & Social Security
The United States Conference of Catholic Bishops (USCCB) has long been supportive of Social Security. In 1999, the USCCB released a document detailing future reform of the program in light of Catholic teaching. The Bishops proposed six areas of consideration: human dignity, the common good, option for the poor/solidarity, subsidiarity, the role of individuals and the private sector, and the role of government. In any reform, these six principles must be in proper harmony.
The bishops placed special emphasis on the need to protect the most vulnerable. “Changes in Social Security should not put at risk those individuals and families whose resources are already very limited.” This includes the privatization of Social Security which, according to the USCCB, would be “a structural shift from a social insurance program to a retirement investment program.”
Finally, the Bishops call on all Catholics to learn more about the program and “examine it through the lens of Catholic social teaching principles.”
Catch all of Drew’s conversation about Social Security here: https://relevantradio.com/2023/04/social-security-running-out-and-trumps-indictment/
