Preserving Social Security

Opinion: September 6, 2010 at 12:00a.m.

Miami Herald: Last month, trustees announced that for the first time since 1983 Social Security will pay out more in benefits, by $41 billion, than it receives in payroll taxes. That announcement, along with the long-term insolvency in Social Security funding, should serve as a warning that the nation’s public retirement system is in need of repair.

But before reaching out for drastic solutions, Congress and President Obama’s National Commission on Fiscal Responsibility and Reform — which is considering a variety of changes — should keep an open mind regarding all the alternatives. Some are definitely worse than others.

Social Security is a vital part of the nation’s economy. Roughly one in six Americans, about 53 million — including retirees, disabled workers, and dependents — draw Social Security benefits. It’s a lifeline for seniors, 60 percent of whom (over 65) get more than half their income from the monthly check.

Over the years, it’s been necessary to tweak the system now and again. The payroll tax has climbed from 2 percent in 1937 to 12.4 percent today — half paid by workers, half by employers. In 1983, Congress enacted comprehensive changes, including raising payroll taxes and reducing benefits.

Now, more tweaks are on the table.

What’s ahead

By 2037, Social Security will pay out only 75 percent of scheduled benefits because the trust fund will have been drained. The reason is largely demographic. An aging population ensures that more money flows out of the fund than the amount received.

Cutting benefits is probably the least attractive proposal. The average monthly benefit is about $1,150 or $14,000 yearly, not a grand sum by any measure. Reducing payouts is unfair to those who have earned the right to a decent retirement.

Social Security celebrated its 75th anniversary in August. It’s a tremendous success story. Keeping it that way won’t be easy, but fixing it is necessary. Congress is duty-bound to make sure that whatever solutions it comes up with do the least harm to current and future retirees.