Social Security Reform: Current Issues and Legislation Page: 2 of 27
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Social Security Reform: Current Issues and Legislation
In recent years, President Bush's initiative to restructure Social Security through
the creation of individual accounts moved Social Security reform to the forefront of
the political debate. While much attention has been focused on the issue, there has
been no legislative action. In his Fiscal Year 2008 Budget, President Bush restated
his support for voluntary individual accounts funded with a portion of current payroll
taxes and a change in the benefit formula known as "progressive indexing" as part
of a Social Security reform package.
The spectrum of ideas for reform have ranged from relatively minor changes to
the pay-as-you-go social insurance system enacted in the 1930s to a redesigned,
"modernized" program based on personal savings and investments modeled after
IRAs and 401(k)s. Proponents of the fundamentally different approaches to reform
cite varying objectives that go beyond simply restoring long-term financial stability
to the system. They cite objectives that reflect different philosophical views about
the role of the Social Security program and the federal government in providing
retirement income. However, the system's long-range financial outlook provides a
backdrop for much of the Social Security reform debate in terms of the timing and
degree of recommended program changes.
Currently, the Social Security system is generating surplus tax revenues.
However, its board of trustees reports that the trust funds will be depleted in 2041,
at which point an estimated 75% of benefits would be payable with incoming receipts
(under the intermediate projections). The primary reason is demographics. Between
2010 and 2030, the number of people age 65 and older is projected to grow by 75%
while the number of workers supporting the system is projected to grow by 6%. In
addition, the trustees project that the system will begin running cash flow deficits in
2017, at which point other federal receipts would be needed to meet benefit costs.
If there are no other surplus governmental receipts, policymakers would have three
options: raise taxes or other income, reduce spending or borrow.
Public opinion polls show that fewer than 50% of respondents are confident that
Social Security can meet its long-term commitments. There is also a public
perception that Social Security may not be as good a value for future retirees. These
concerns and a belief that the nation must increase national savings have led to
proposals to redesign the system. At the same time, others suggest that the system's
financial outlook is not a "crisis" in need of immediate action. Supporters of the
current program structure point out that the system is now running surpluses,
continues to have public support and could be affected adversely by the risk
associated with some of the reform ideas. They contend that only modest changes
are needed to restore long-range solvency to the Social Security system.
During the 109th Congress, 10 Social Security reform bills, most of which would
have established individual accounts, were introduced. None received congressional
action. In the 110th Congress to date, one Social Security reform measure, which
would establish voluntary individual accounts funded with general revenues, has
been introduced. This report will be updated as legislative activity warrants.
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Social Security Reform: Current Issues and Legislation, report, April 25, 2007; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc817480/m1/2/: accessed November 16, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.