washingtonscene
that large generation are escalating rap- idly. Second, people are living longer — much longer — than program designers anticipated. Third, lower birth rates in recent decades mean fewer people are in the workforce paying payroll taxes. That’s important because today’s
workers are paying most of today’s re- tirees’ Social Security checks. If you’re Social Security-eligible, you have an ac- count that shows your earnings history and the benefits you’re entitled to re- ceive. But the taxes you paid went to pay benefits to a previous generation, and your benefits today are funded mostly by current workers’ payroll taxes. Even in the worst case situation — if
Congress doesn’t act sooner to sustain the trust fund beyond 2034 — Social Se- curity won’t go away when the fund is exhausted. But benefits would have to be cut by about 25 percent for everybody at that point to keep them within the expected payroll tax receipts. Alternatively, payroll taxes could be
raised another 2.7 percentage points to cover current benefits. That would be a 43-percent increase in the current 6.2-percent payroll tax rate. But odds are neither of those ex-
tremes will happen. Almost certainly, some kind of compromise will tamp down future benefit growth, raise more tax revenue, or (most likely) provide a combination of both.
Options discussed for curbing future benefit growth include: raising the eligibility age to receive full benefits by one to three years;
implementing some modification of the annual COLA formula;
going to a biennial COLA instead of an annual one; and
tweaking the benefit formula or wage base history.
34 MILITARY OFFICER NOVEMBER 2016 Options to raise revenue include:
raising the maximum annual earn- ings subject to payroll taxes (currently $118,500 a year);
increasing the payroll tax percentage; expanding the federal income tax on Social Security benefits; and
treating employer-paid health care premiums as taxable income for the worker. None of these options is popular, and
that’s why no action has been taken on any of them yet. However, at some point in the com-
ing years, the threat of imposing a 25-percent cut in Social Security ben- efits (which would outrage seniors) or a 43-percent increase in payroll taxes (which would outrage workers) will ne- cessitate a serious look at various com- promise options. MOAA believes that will serve all concerned parties. Our members have parents, children, and grandchildren and want to protect the interests of all those groups in the fairest possible manner.
Social Security
Fast Facts Test your knowledge.
T
he Social Security Administration released a new publication, Fast Facts &
Figures About Social Security, 2016. Some of these facts are presented for your consideration on page 36. In the next Congress (2017-18), entitlement reform (including Social Security) almost certainly will be a hot item, and we expect a range of old and new ideas will be put on the table by various politicians, interest groups, and appointed panels.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88