Why Won’t Anybody Fix Social Security?

The first warning sign popped up this week when it was revealed that Social Security Disability Insurance (SSDI) is almost out of money. This is a separate part of Social Security that funds the needs of people who are “disabled” and can no longer work in a substantial, gainful way. 
This fund will run completely out of money in the next few (4-7) years, leaving some of the neediest of Social Security benefactors without coverage!
A problem with this fund and its use is that sympathetic doctors and unmotivated people can abuse it. This problem is made worse by the lax, widely distributed control of the decisions (state and local) about who qualifies.  This control issue is that both states and territories have great influence on the decisions and discipline varies widely.
There is a solution, of course.  Take money from the larger Social Security “trust fund,” and transfer it to this on.  The larger fund is now projected to last for another 20-30 years.  BUT—and this is a big BUT—when people are on SSDI for two years, they also qualify to draw full Social Security benefits.  Since these are among the most infirm of beneficiaries, but have a substantial life expectancy, their needs become very expensive ($300,000 per person on average).
There is a larger problem, however:  The so-called Social Security Trust Fund is a hoax, and an illusion. It’s an “empty bucket” full of useless IOUs from the U. S. Federal Government.  There is no money there to be used!

With these ominous facts in mind, the original question becomes the big question:  Why isn’t anyone in government actually working to fix Social Security (not just talking about doing it)? Of course you know the answer:  they are afraid they won’t get reelected!


Fixing Social Security is not complicated—it’s just unpopular.  Too much money is being paid out; too little is coming in; too few workers are supporting too many retirees and it will get much worse in coming years.  The time to do it is NOW!
The immense budget deficit and national debt can never be brought back under control unless the four largest spending accounts are “fixed.”  Let’s start with this one.
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Consensus Among Parties: Borrowing More to Pay Down National Debt Unwise[1]
WORTHINGTON, OH– (Marketwire – March 9, 2011) – 69.4% of Registered Voters agree that national debt is a major problem in the United States, according to the latest American Pulse™ Survey of 5,224 respondents.
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The proposed 2012 budget from the White House shows spending of $3.7 Trillion, of which Social Security is the largest item at $767 Billion, followed by Defense at $738 Billion, Medicare at $492 Billion and Medicaid at $269 Billion.  That is a total of almost $2.3 Billion—more than 60% of the Budget.

When you are trying to bring a budget into balance, the place to start is by cutting the largest expenditure(s). Now if the time to do something—but where is the Presidential Leadership on this?
A Social Security fix is not painless, but it is relatively simple:

1. Increase retirement age ASAP (not 50 years from now)! Move it up to age 70 starting in 2013. Let current or near term retirees have the same benefits as now.  Actuarially reduce benefits for retirement at ages 62, 65, 67.5 and move “full benefits” up to age 70.  Then also index “full” retirement age to “life expectancy” (78), keep it 10% below that age.
2. Employ means testing to adjust benefits in steps for those earning over $250,000, $500,000, and $1 million, who can afford reduced benefits without hardship.
3. Change COLA to cost based and not wage based.  That’ll help immediately.
4. Raise the income on which FICA payments are made—commensurate with the increased retirement age and index it to COLA also.

I’m no financial wizard, but if I know these four fixes, then certainly those more expert than me know them too.  They, and particularly their elected bosses, (Congress and the President) just lack the guts, the integrity and the common sense to face this problem and fix it. This must be done—and soon.  Why not now?
Of course these changes will be unpopular, but the consequences of not making them will be worse.  Fixing Social Security is imperative if we are to sustain benefits for generations to come.
Why won’t anybody take the lead push this obvious change? (Politics & fear!)  Fixing Social Security is a lot easier than fixing the waste and corruption riddled budgets of Defense, Medicare and Medicaid—BUT those three need to be “fixed” too. This is just a good warm-up.  Start NOW!