Recently, I met with leaders of the National Committee to Preserve Social Security and Medicare in my office. One of the issues we discussed was Social Security, a topic that regularly comes up at my 99 county meetings.
Did you know FDR signed the Social Security Act into law 90 years ago on Aug. 14, 1935? As we approach the historic anniversary of the bill’s signing, there’s no question this landmark law stitched a social contract among Americans, bridging generational, socio-economic, geographic and ideological divides. It works because every generation has skin in the game. It’s a contract that’s stood the test of time for nearly a century. I often tell Iowans Social Security is part of the social fabric of America.
The financial safety net provides seniors a guaranteed source of income in retirement. It’s an anti-poverty, social insurance program that allows older Americans to live with dignity after a lifetime of work. Social Security benefits are financed by payroll taxes split between workers and their employers. The money taken out of workers’ paychecks is accounted for in the Social Security Trust Fund that accrues interest and pays current beneficiaries. So, when workers reach retirement age, they can start drawing their earned retirement benefits financed by the current U.S. labor pool.
This pay-as-you-go system is not a scheme or a financial scam. Or to repeat what some say, Social Security is not a Ponzi scheme. It’s a social contract administered by the government that forges a generational commitment between workers and retirees.
At the same time, we can’t afford to ignore Social Security’s fiscal challenges to ensure Americans receive the benefits they have earned over the course of their years in the workforce.
For example, during my first term in the U.S. Senate, President Ronald Reagan and House Speaker Tip O’Neill overcame political headwinds to secure the program’s financial solvency for the next half-century. Absent another Reagan/O’Neill type bipartisan victory, the reserves in the Old-Age and Survivors Trust Fund will be depleted in just eight years. Without legislative reforms, every beneficiary across-the-board will see an automatic cut in expected monthly benefits, according to the annual report issued by the Social Security board of trustees. Specifically, payroll tax revenue coming into the trust fund in 2033 will be sufficient to pay 79 percent of scheduled benefits.
All elected officeholders, political candidates, grassroots advocacy leaders and members of the media need to learn from the historic agreement reached in 1983 that put Social Security on sound financial footing. It’s intellectually dishonest to ignore or dismiss the program’s looming insolvency. We can and must address the nation’s demographic shift to ensure Social Security continues to serve Americans from one generation to the next. Kicking the can down the road undermines the public trust. That’s why I’m a tireless advocate in Congress to ensure Social Security keeps its promise to the American people for the next 90 years and beyond.