The Trustees that manage the United States Social Security Program recently released their annual report that details the health of the system for the next 75 years.
No matter where one stands on the political spectrum, the report has an indisputable and blunt conclusion: the fund will be insolvent in just 11 years. Doing nothing will mean an immediate cut of over 20% in benefits to ALL recipients of Social Security benefits, no matter what age or income level.
As the Utah Taxpayers Association pointed out in our recently released 2023 Beehive Family Report, the typical Utah family’s highest tax burden by far continues to be federal Social Security and Medicare taxes, also known as payroll taxes or self employment taxes. These are the taxes that fund the Social Security and Medicare trust funds. That makes up over 54% of the taxes that the typical family pays.
It needs to be made clear: elected officials that continue to “refuse to touch Social Security” are making an endorsement of a sudden 20% across-the-board benefit cut that will be imposed on beneficiaries of all ages and incomes within the next 11 years. In fact, during the 2026 midterm elections which are quickly approaching, Americans will be electing members to the Senate that will have to deal with this issue. It is time for taxpayers and voters to call the bluff on members of Congress and Presidential candidates that continue to hide behind this sham of a position. This looming insolvency can no longer be ignored, and decisions about the future of Social Security can no longer be deferred.
It should be noted that taxpayers who are 56 years old today will reach full retirement age for benefits in that 11 year timespan, when 2033 rolls around. The recent surge in inflation has made the problem even worse as benefits have been raised to adjust to the higher levels of inflation. The longer policymakers wait, the worse the problem gets. As precious time goes by, the cost of any proposed “fixes” or solutions rise. Acting sooner leaves more options on the table, allows for more gradual phase-ins and gives everyone time to plan and adjust.
If members of Congress wanted to solve the problem with a massive tax hike on all working Americans in order to plug the hole, the amount of the tax hike would be staggering. Payroll taxes would need to be hiked by 28% (3.4% more than the current 15.3% of gross wages) and hiked 33% (4.3% more than the current 15.3% of gross wages) again in 2034. With a taxable wage base in the United States of $17.6 trillion in 2018 that would equate to a total tax hike of $756.8 billion. To say that is unlikely to pass in Congress would be quite the understatement.
There are many possible solutions that could be considered instead of a massive, economy-killing tax hike. Refusal to face the reality of the situation and demagoguing those that talk about it will do nothing but enshrine a 20+% cut in benefits to everyone in 11 short years. Claims that those who want to save the system only want to “cut social security” are completely false. Those that are brave enough to tell the truth need to step forward.