Will social security undergo a fundamental change? | Smart Change: Personal Finances
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A senator sent shockwaves through the political community earlier this month when he made a bold statement about the future of Social Security. Many lawmakers have called for Social Security reform, but recent comments by Sen. Ron Johnson (R-WI) suggest more extreme changes than many of his peers have sought to make.
Earlier this month, the Wisconsin senator shared his thoughts on solutions to our nation’s Social Insurance program by suggesting that Social Security funding be changed from mandatory to discretionary. In a statement, he said:
What we should do is we should turn everything into discretionary spending so that everything is evaluated so that we can fix the problems or fix the programs that are broken, that are going to go bankrupt… As long as things are on on autopilot, we just keep piling up debt.
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He then singled out Social Security and Medicare as two programs he said should be moved to discretionary funding.
What this proposal would mean for social security
This plan would essentially mean that each year Social Security funding would depend on the vote of Congress in the annual budget instead of being part of our mandatory annual spending. Johnson’s comments drew understandably harsh criticism, but Alexa Henning, a representative for Johnson, explained her statement by saying:
The senator’s point was that without the fiscal discipline and oversight typically found with discretionary spending, Congress has allowed guaranteed benefits for programs like Social Security and Medicare to be threatened.
This needs to be addressed by Congress taking its responsibility seriously to make sure seniors don’t need to worry about whether the programs they depend on remain solvent…We need a process to save these programs and no one is doing anything to save them in the long run. We just keep racking up debt, mortgaging our children’s future and jeopardizing those programs.
The risks of making Social Security discretionary
The problem with these comments is that changing Social Security to a discretionary line item puts future benefits at higher risk, not the other way around. Over the past few years we have seen multiple government shutdowns and when that happens all programs related to discretionary funding come to a halt.
However, the proposal is highly unlikely to ever materialize. Senate Minority Leader Mitch McConnell (R-Ky.) crushed any idea of a Social Security sunset in March after a proposal was introduced by Sen. Rick Scott (R-Arizona) that contained cuts social security financing.
if we are lucky enough to have a majority next year, I will be the majority leader. I will decide in consultation with my members what to put on the floor. Let me tell you what wouldn’t be on our agenda: we won’t have on our agenda a bill that raises taxes on half of Americans and cuts Social Security and Medicare. illness within five years.
Asked about his thoughts on Johnson’s suggestion to make Social Security spending discretionary, a representative for McConnell recalled the minority leader’s comments in March.
Why there’s little to worry about
Pursuing a Social Security overhaul at this time carries great political risk, as we are currently witnessing the largest transition of Americans into retirement age in our country’s history. Over the next decade, it is estimated that nearly 20 million Americans will turn 65, resulting in a 35% increase in the 65+ population.
Many of these older Americans have spent the majority of their careers contributing to the program and likely depend on at least a portion of their estimated benefits for a comfortable retirement. Anything that jeopardizes benefits could anger Social Security recipients, with ramifications at the ballot box.
In my view, this makes massive changes in Social Security funding unlikely in the coming years. Still, it’s worth keeping an eye on Washington to see if these or similar proposals gain traction.
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