Gainesville Guardian (FL)
WASHINGTON — When you
inherit a mess, as President Joe Biden has, everyone needs you to make their
issue a priority.
The novel coronavirus is
still spreading, causing thousands of deaths each day, and we can't get enough
vaccines in the arms of people to stop it, or at least slow it down.
People are struggling to
pay their rent or mortgages or put food on the table. Just last week, 900,000
people filed new unemployment claims.
Biden is moving fast to
help. He's extended the payment pause for federal student loans until
September. By executive order, he's extended a freeze on evictions nationwide
through the end of March. Biden also extended to March a moratorium on
foreclosures and evictions for borrowers with federally guaranteed mortgages.
But there's another
matter that should get Biden's immediate attention. Right now, while the
Democrats control the House and Senate, Biden needs to put this on his to-do
list: fixing Social Security.
Many young adults already
believe Social Security won't be around for them to collect. Although Social
Security isn't bankrupt, it's certainly facing a serious shortfall in income to
cover promised payments.
"Social Security and
Medicare both face long-term financing shortfalls under currently scheduled
benefits and financing," according to the 2020 trustee report for the
Social Security and Medicare trust funds.
The reserves of the
Old-Age and Survivors Insurance Trust Fund (OASI), which pays retirement and
survivor benefits, will be unable to pay full benefits by 2034, the Social
Security Board of Trustees projected. Without legislative action, in little
more than a decade, OASI will have only enough tax income to pay out 76 percent
of scheduled payments.
The Disability Insurance
Trust Fund, which pays disability benefits, is in slightly better shape. The
fund will have enough money coming in to cover 92 percent of scheduled
benefits. The disability trust fund is healthier, in part, because applications
have been decreasing since 2010. The number of disabled-worker beneficiaries
receiving payments has also declined.
However, given how
covid-19 is impacting millions of individuals, the solvency of the disability
trust fund may be in jeopardy sooner than the projections show.
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In an update last April,
the trustees noted the covid-19 pandemic could impact the financial health of
the funds. "The duration and severity of the pandemic will affect the
estimates . . . and the financial status of the program, particularly in the
short term," said Andrew Saul, commissioner of Social Security.
And now we know that some
people are having health issues long after recovering from the virus. The
Centers for Disease Control and Prevention (CDC) had reported that some
long-term symptoms have included joint pain, respiratory abnormalities,
inflammation of the heart muscle, and depression.
In November, Social Security's
Office of the Chief Actuary released an informational letter updating the
pandemic's effect on the trust funds, noting "the effects of the pandemic
and recession will be significant."
More people unemployed
means less payroll taxes collected. Low interest rates may help boost consumer
spending, but it also means less income earned on the securities held by the
trust funds, the Peter G. Peterson Foundation pointed out in a blog post last
year.
The covid-related economic
downturn will likely accelerate the timing of the shortfalls, according to a
brief by the Bipartisan Policy Center.
Social Security is
literally the financial lifeline for millions of Americans. Fifty-seven percent
of retirees rely on Social Security as their major source of income, according
to a 2018 Gallup poll.
Former President Donald
Trump left office without taking any action to fix Social Security.
One solution often touted
is raising the income threshold for the Social Security payroll tax. This year,
the maximum amount of earnings subject to the Social Security tax will increase
to $142,800, up from $137,700. Earnings above the maximum are not subject to
the Social Security tax, which is 6.2 percent for employees and a matching 6.2
percent for employers.
There's no income cap for
the Medicare tax, which is 2.9 percent. (Employers pay 1.45 percent and
employees cover the other half.). The self-employed pay the entire 12.4 percent
for Society Security and 2.9 percent for Medicare.
Of the 178 million workers
with earnings in Social Security-covered employment in 2019, about 6 percent
had earnings that equaled or exceeded the maximum amount subject to taxes,
according to the Social Security Administration.
During his campaign,
Biden said that, if elected, he would address the solvency problem by adding a
new tier of FICA contributions for high earners. He recommends applying the
payroll tax to income above $400,000, which would still only extend the life of
the trust funds by about five years, according to a report by the Urban
Institute.
Biden said older
Americans should be able to count on a "steady, secure income as you age
so your kids won't have to take care of you in retirement." This means
protecting and strengthening Social Security, he said.
On the White House
website, the Biden administration listed its "immediate priorities" -
containing covid-19, encouraging a clean energy revolution, addressing systemic
racism, providing relief to people struggling with the economic fallout from
the pandemic, providing affordable health care, reforming immigration, and
finally restoring America's global standing.
It's an ambitious list.
Every action is worthy of Biden's attention now, but tackling the looming
Social Security crisis needs top billing, too.
Readers can write to
Michelle Singletary c/o The Washington Post, 1301 K St., Washington, D.C.,
20071. Her email address is michelle.singletary.washingtonpost.com.
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