Dire predictions of “bankruptcy” for Social Security aren’t true, but the system could be put on firmer ground if people with the highest incomes were to ante up as much of their salaries as lower-income workers do, a national advocate for saving the system said Monday.
Despite what politicians across the country are saying, the system won’t go bankrupt in 2035, says Dan Adcock, policy director and lobbyist for the national Committee to Preserve Social Security and Medicare.
But what could happen is that the system could spend down its reserves and have to cut benefits, he said.
“According to the latest report by the Social Security trustees, the program will be able to pay full benefits until 2034 and after that point it will only be able to pay 79 percent of benefits,” Adcock said.
Sign Up and Save
Get six months of free digital access to The Wichita Eagle
The reason is that Social Security is currently spending down its reserves, he said. By 2034, the program could be dependent on its annual income from payroll taxes of working people and taxes on benefits paid by retirees.
“It’s a mischaracterization to describe that as bankruptcy,” he said. “The reserves (would be) depleted, but it’s not bankruptcy because there’s still money coming into the program. Obviously we don’t want that to happen and we think there are modest solutions to ensure that that doesn’t happen without it harming beneficiaries.”
He said his organization thinks the best solution would be to either raise or eliminate the salary cap on the payroll taxes that fund Social Security. At present, high-income workers pay Social Security taxes on their first $128,400 of income.
The committee is also battling congressional efforts to cut Medicare by turning it into a voucher program.
While the plan cleared the first hurdle in a budget committee, House leaders haven’t brought it to a floor vote because they don’t think they have the votes to get it through in an election year, he said.
The midterm congressional elections coming up in November will pretty much decide what happens next, Adcock said.
“Depending on what the balance of power in Washington is in the next year, either we’re going to be fighting proposals to cut these programs or we’re going to elect majorities who will oppose cuts,” he said.
In addition to lobbying Congress on behalf of Social Security and Medicaid, the group has a political action committee that supports like-minded candidates.
He said the group will likely provide some support for two Kansas Democratic congressional candidates: Paul Davis in District 2, an open seat where he faces Republican Steve Watkins; and Sharice Davids in District 3, where incumbent Republican Kevin Yoder is perceived as vulnerable.
But however the election turns out, he said there is and will continue to be pressure to cut benefits to offset losses from Republican tax cuts that are estimated to shear $1.5 trillion from federal income over the next 10 years.
“Shortly after the passage of the tax bill, both (House) Speaker (Paul) Ryan and Sen. Marco Rubio from Florida, they both said since they passed a tax bill the next step would be ‘entitlement reform’ and we see those two words as code for cutting Social Security and Medicare and Medicaid,” Adcock said. “We don’t think it’s any accident that they mentioned that in the context of approval of the tax bill . . . our concern is what they’re going to do is they’re going to have to pay for the tax bill by cutting Social Security, Medicare and Medicaid.”
Adcock is in Kansas to appear as the keynote speaker at the Sunflower Fair in Salina, an annual event bringing together about 750 seniors, people with disabilities and caregivers from throughout the region to discuss health and wellness issues.
Adcock also said his organization is also concerned about congressional efforts to increase the age for eligibility for Medicare, from the current 65 to 67.
“That definitely saves the Medicare program some money but it costs just about everybody else something,” he said. “(For) seniors who are 65 to 67 who would not yet be eligible for Medicare, it means if their employer does not provide health insurance for retirement, they would have to go to plans that would be available under the Affordable Care Act.”
Another problem with that is it would cause an influx of older people into the ACA risk pool. Because they generally need more medical care than younger people, that would likely raise prices of insurance across the entire system, Adcock said.
It would also raise costs for employers who provide retirees with health insurance because they’d have to pay “full freight” for two additional years per person, he said. And states would be hurt as well, because they’d have to pay for Medicaid coverage for more low-income seniors who would otherwise age into Medicare coverage.
The Sunflower Fair begins at 8 a.m. Tuesday at the Tony’s Pizza Events Center in Salina. The event is open to the public and will feature a variety of seminars, exhibits and health screenings. The cost at the door is $25 and includes a banquet luncheon.