Is Social Security About to See a Fundamental Change? | personal finance

(Mark Blank)

One senator sent shock waves through the political community earlier this month when he made a bold claim about the future of Social Security. Many lawmakers have called for Social Security reform, but the recent comments from Sen. Ron Johnson (R-WI) suggest more extreme changes than many of his peers have looked to make.

Earlier in the month, the Wisconsin Senator shared his thoughts about the solutions to our nation’s social insurance program by suggesting the funding for Social Security be changed from mandatory to discretionary. In a statement, he said:

What we ought to be doing is we ought to turn everything into discretionary spending so it’s all evaluated so that we can fix problems or fix programs that are broken, that are going to be going bankrupt … As long as things are on automatic pilot , we just continue to pile up debt.

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He went on to single out Social Security and Medicare as two programs that he believes should be moved to discretionary funding.

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What this proposal would mean for Social Security

This plan would essentially mean that every year, funding for Social Security would be dependent on Congress voting it into the annual budget as opposed to it being part of our mandatory annual spending. Johnson’s comments have been met with some understandably harsh criticism, but Alexa Henning, a representative for Johnson, explained his statement, saying:

The Senator’s point was that without fiscal discipline and oversight typically found with discretionary spending, Congress has allowed the guaranteed benefits for programs like Social Security and Medicare to be threatened.

This must be addressed by Congress taking its responsibilities seriously to ensure that seniors don’t need to question whether the programs they depend on remain solvent… We need a process to save these programs and no one is doing anything to save them long term . We just continue piling up debt, mortgaging our children’s future, and putting these programs at risk.

The risks of making Social Security discretionary

The problem with these comments is that changing Social Security to a discretionary line item on the budget puts future benefits at higher risk, not the other way around. In recent years, we’ve seen multiple government shut downs, and when this happens, all programs tied to discretionary funding grind to a halt.

However, the proposal is very unlikely this will ever come to fruition. Senate Minority Leader Mitch McConnell (R-Ky.) squashed any ideas of sunsetting Social Security in March after a proposal was put forth by Sen. Rick Scott (R-Ariz.) that contained reductions to Social Security funding.

if we’re fortunate enough to have the majority next year, I’ll be the majority leader. I’ll decide in consultation with my members what to put on the floor. Let me tell you what would not be a part of our agenda: We will not have as part of our agenda a bill that raises taxes on half the American people and sunsets Social Security and Medicare within five years.

When asked about his thoughts on Johnson’s suggestion that Social Security spending be made discretionary, a representative of McConnell pointed back to the minority leader’s March comments.

Why there’s little reason to worry

Pursuing an overhaul of Social Security right now carries great political risk, because we are currently seeing the largest transition of Americans into retirement age in our nation’s history. Over the next decade, it’s estimated that nearly 20 million Americans will turn 65, which will bring about an increase of 35% in the 65-and-older population.

Many of these older Americans have spent the majority of their careers paying into the program and likely depend on at least a portion of their estimated benefits for a comfortable retirement. Anything that jeopardizes benefits could make Social Security recipients angry, with ramifications at the polls.

In my view, that makes massive changes to Social Security funding in the coming years unlikely. Nevertheless, it’s worth keeping an eye on Washington to see whether these or similar proposals gain traction.

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