Social Security is a bedrock of Alaska and the entire U.S.

We can never insure 100% of the population against 100% of the hazards and vicissitudes of life. But we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age. – Franklin D. Roosevelt, Aug. 14, 1935

In June of this year a most important document with a whopper of a title was released, “The 2022 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds,” but don’t dismiss it on the basis of the bureaucratic moniker. On the street and at intimate cocktail parties held by the cognoscenti it is commonly referred to as “The Trustees Report.”

The subject of this report is Social Security. The enormity of the program is reflected in even a brief overview. It is a trillion-dollar program paying benefits to nearly 63 million beneficiaries, which amounts to about one in every five Americans and one of every three households. Despite the popular perception that Social Security is for “old people,” about one in four beneficiaries are under age 65. In fact, Social Security is the nation’s largest children’s program. 

Circling back to Social Security and older people, the program has been instrumental in slashing poverty among the elderly. For example, according to a 2018 report issued by the Center on Budget and Policy Priorities (CBPP), the poverty rate among Americans aged 65 and older without Social Security was about 40%, but only 9% for those who received Social Security. Another way of looking at this is that Social Security lifted 15,304,000 Americans aged 65 or older out of poverty. Perhaps of special interest to Alaskans,

“Nationwide, Social Security provided 90 percent of the income for 1 in 8 (12 percent) elderly American Indian and Alaska Native married couples, and half (50 percent) of elderly unmarried persons in 2011,” according to a 2015 fact sheet issued by the Social Security Administration. Social Security provided benefits to 98,359 Alaskans, 13.3% of residents. – Report by the nonprofit Social Security Works in 2019

Moving on to a more strictly Alaska focus, the broad impact of Social Security in Alaska more or less mirrors that in the lower 48. For example, according to “Social Security Works for Alaska,” a 2019 report issued by the nonprofit Social Security Works, 

• Social Security provided benefits to 98,359 Alaskans, 13.3% of residents.
• Alaskans received Social Security benefits totaling $1.4 billion.
• Social Security lifted 31,146 Alaskans out of poverty.

Contrary to what you may have heard, Social Security is not on its last legs. It will be here for you even if you are young and just starting out – assuming it is not privatized or eliminated by meddling politicians. For example, Sen. Rick Scott (R-FL), who is chair of the Senate Republican campaign arm, has been pushing a plan that would give Congress the power and the option to terminate Social Security and Medicare every five years. 

As nicely summarized in a June communique by Social Security Works, Social Security has enough funding to get the job done in the coming decades:

This year’s report [2022] announces that Social Security has an accumulated surplus of approximately $2.85 trillion. It projects that, even if Congress took no action whatsoever, Social Security not only can pay all benefits and associated administrative costs until 2035, it is 90 percent funded for the next quarter century, 84 percent for the next half century, and 81 percent for the next three quarters of a century.

That’s pretty good, but not perfect. Barring any interventions, Social Security is anticipated to remain strong in the coming decades, but not strong enough to achieve full payouts for all beneficiaries. In the course of Social Security’s history, there have been projected shortfalls several times. These were addressed every time by relatively incremental fixes. What can be done this time? 

In the broader background discussion of their report on Alaska, Social Security Works noted that, “While 94 percent of covered workers make Social Security contributions on all of their wages, millionaires and billionaires contribute on only the first $132,900 of their earned income in 2019. Furthermore, their unearned income—income from investments—is not subject to Social Security contributions.” Consequently, their recommendations include:

• eliminate the cap on wages subject to Social Security contributions
• incorporate high earners’ investment income into Social Security, as has been done with Medicare
• dedicate revenue from our most progressive tax—the federal estate tax—to our Social Security system

The analysts note that, “These reforms would eliminate Social Security’s projected shortfall entirely, while providing enough revenue to expand benefits as well.”

Originally published in the Alaska Beacon