Social Security has not yet cracked into the top issues in the race for Michigan’s open U.S. Senate seat.
That’s negligent, considering that before the end of the six-year term of whomever is elected in November, the 90-year-old retiree benefit program will be busted, and heading off steep benefit cuts will be Congress’ major preoccupation.
A report released Wednesday by the Committee for a Responsible Federal Budget projects Social Security will be insolvent by 2032, resulting in a 24% cut in the monthly checks received by 63 million retirees, their spouses and dependents.
The No State Spared report maps the impact by state, and as is typical whenever economic rankings are released, Michigan sits in the top 10 of those most negatively impacted.
The report expects the average recipient in Michigan will lose $523 a month, the ninth largest hit in the nation. That’s a car payment. Or the monthly grocery bill. Or the supplemental health insurance premium.
More than two million Michigan residents will be impacted, or just under 20% of the population. The cuts will take $12.1 billion a year out of the state’s economy, or 1.6% of its annual economic output.
Cuts in Michigan will be more severe because the state has a higher percentage of older residents and a below-the-national average household income.
In sum, an already poor state will get much, much poorer.
But nobody’s talking about that on the campaign trail, because nobody wants to do the hard work of putting sensible solutions in place.
Insolvency Day ― the point at which the Social Security Trust Fund runs dry and the program must move to a pay-as-it-goes model ― has been coming for 42 years. That’s how long Washington has known Social Security would go bankrupt, and how long it has avoided putting in place fixes to keep that from happening.
For the past 19 years, Social Security has had to borrow from its trust fund to fully cover the benefits it pays out. Now, with just six years of assets left in the fund, heading off the inevitable will be far more painful.
Our penchant as a people for ignoring problems until they become crises has put us in the position of having to act immediately and more aggressively to avert a total disaster in six short years.
The options are the same as they have been for decades: Raise taxes, cut benefits or find alternative funding sources.
Hiking the combined employee/employer payroll levy to 16.05% from 12.4% would keep Social Security going for another 75 years, if politicians don’t get too frisky about raising benefits.
Ending the cap on Social Security deductions, or raising it enough to cover the full earnings of 90% of workers and their employers, would also flood the system with money. But eliminating the tax cap while keeping the benefit cap would end the pretense that Social Security is a savings program and confirm it as an entitlement.
Gradually raising the full retirement age, currently at 67, would stretch the trust fund’s resources out several decades, as would a downward adjustment in annual cost-of-living increases.
Any one of these solutions, or a combination of them would assure today’s workforce could count on Social Security being around and healthy to help support them in retirement.
What we can’t count on is that the politicians we elect this year will be up to the task of preventing Social Security from slamming into a wall.
Nolan Finley’s columns appear in The Detroit News. Reach him at nfinley@detroitnews.com and follow him on X @NolanFinleyDN.
This article originally appeared on The Detroit News: Finley: Counting on Social Security? Don’t.
Reporting by Nolan Finley, The Detroit News / The Detroit News
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By Nolan Finley, The Detroit News | USA TODAY Network
