When Social Security began, no one could retire until age 65 -- and the life expectancy was less than that. In other words, for most people, they would never see a dime of what they paid in. Now people live longer than the age at which they can retire. We are also welcoming 50 million baby boomers who will be receiving Social Security -- which means 50 million people who will no longer be paying in.
In 1983, Congress raised the payroll tax rate that funds Social Security benefits to prepare for the retirement of the baby boom generation. Much to my disappointment, however, the actual cash surplus from the excess payroll taxes, amounting to $2.4 trillion including interest over the last 25 years, was borrowed from the Trust Fund and used to support government spending on other programs. In return for the borrowed funds, the Social Security Trust Fund was credited with Treasury bonds. These bonds are backed by the full faith and credit of the federal government and they earn interest, but these bonds are not "real" assets with cash value. Instead, they merely represent a first claim on future revenues. If the revenues are not there (and they will not be as long as the government continues to run budget deficits), then the federal government will have to raise taxes or cut other spending to finance promised Social Security benefits. This is gross financial mismanagement. We don't have enough trust funds with money in them to satisfy the demands put on our government. We need to start making the right choices.
Money from our paychecks that is for Social Security is sent in and then paid out right away to those retired. There used to be more paid in than had to be paid out in a single month. But now the payroll taxes coming in are less than the Social Security payments made to beneficiaries. That means the government has to start drawing down the Trust Fund to fully pay Social Security benefits. The Trust Fund is anticipated to be exhausted by 2033. Thereafter, payroll taxes will be sufficient to pay only about three-quarters of scheduled benefits. We need solutions that are for the long-term and that put Social Security on a sustainable path so Americans now and into the future can rely on it. A little bit of pain now to shore up the Trust Fund will prevent a lot of pain in the future for those depending on Social Security.
It would have been my preference to adhere to a balanced budget all these years and use the Social Security surplus to pay down our national debt. This would have put the federal government in a much better position to address the economic crisis we face today and make future benefits more affordable. Unfortunately, that opportunity is now lost and we must find a new path. You can be sure that I will continue to use my influence as a senior member of the Senate Budget Committee and the Senate Finance Committee to find a way to put our fiscal house in order and preserve Social Security for all generations.