Cut Cake, Not Benefits: Social Security is 75 Years Young and Still Going Strong
by Joan Entmacher, Vice President for Family Economic Security, National Women's Law Center
This Saturday, August 14, is the 75th anniversary of the signing of the Social Security Act. It was President Franklin Roosevelt who signed the bill into law, but it was Frances Perkins, the first woman in the Cabinet, who made it happen. If you have a couple of minutes this weekend, you can mark the occasion by reading (or listening to) her speech in 1960 commemorating the 25th anniversary. She reminisced about heading the Committee on Economic Security that worked to design Social Security in the depths of the Great Depression, without a budget, computers – or air conditioning, in sweltering Washington, DC.
The creation of Social Security in 1935 was an extraordinary achievement – and over the years, it’s gotten even better for women and their families. Today, Social Security provides at least half of the income of a majority of women 65 and older. For three out of ten elderly single women and women of color, Social Security is virtually their only source of income. And Social Security isn’t just a retirement program; it provides disability and life insurance benefits for young families and does more to alleviate child poverty than any other federal program.
And the really good news is that Social Security can keep going strong and do even more to provide economic security for women and their families for the next 75 years. But policy makers must reject cuts to vital Social Security benefits.
Last week, the Social Security Trustees released their annual report on Social Security’s finances. The Trustees estimated that Social Security can pay 100 percent of promised benefits for more than 25 years, until 2037, even with no changes. And after that, payroll taxes will cover over 75 percent of promised benefits (78 percent in 2038, 75 percent in 2084).
Yes, there is a long-term shortfall in Social Security, but it’s manageable. For about the same cost as making permanent the Bush-era tax cuts for just the richest one percent of households, we could make sure that Social Security can pay 100 percent of promised benefits for the next 75 years. And there are a variety of options for closing this long-term funding gap—and financing needed improvements in benefits for vulnerable beneficiaries at the same time.
Yet some members of the National Commission on Fiscal Responsibility and Reform say that the nation can’t afford Social Security and are considering cutting benefits in the name of deficit reduction. That’s wrong on two counts. Benefits are already modest – about $12,000 a year, on average, for women 65 and older. And Social Security hasn’t added a penny to the federal deficit. In fact, the dedicated taxes that workers pay into Social Security to secure protections for themselves and their families have built up surpluses which are held in the Social Security Trust Funds. This year, reserves in the Trust Fund exceed $2.6 trillion. They are invested in interest-bearing U.S. Treasury bonds backed by the full faith and credit of the U.S. government.
Today, average Americans face the toughest economy since the great Depression. Unemployment is frighteningly high, especially for single mothers and women of color. Older workers who lose their jobs fact the hardest time finding work. Millions of Americans have seen the value of their retirement savings and their homes, their largest asset, plummet. Social Security is more important than ever.
The words of President Roosevelt when he signed the Social Security Act on August 14, 1935, resonate today: “The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure. Young people have come to wonder what would be their lot when they came to old age.” Instead of leaving individuals to face “the hazards and vicissitudes of life” on their own, President Roosevelt and Frances Perkins worked “to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”
For 75 years, the promise of Social Security has been kept. It’s up to us to make sure it stays strong for another 75.
Enjoy your cake!