Social Security is facing a financial crisis. According to an article by the Atlantic Council, it’s cash flow has been negative for over a decade. That means Social Security has paid out more in benefits than it has collected from taxes. To make up for the deficit, the United States Treasury has been borrowing from financial markets to redeem Social Security trust fund securities. Experts predict Social Security will deplete its nearly $3 trillion reserves by 2034.

Benefit Cuts Are Coming

The reporter notes that if nothing is done, once the reserves run out Social Security will have to cap benefits at the level of Social Security taxes received on an annual basis. The article goes on to point out that without significant reforms, in just 10 years eligible beneficiaries will receive less than 79 percent of the scheduled Social Security benefits they were promised. 

The Cost of Procrastination

The longer Congress waits to take action the worse things get. Back in 2020, it was estimated that Social Security trust fund reserves would be depleted by 2037. Ten years later, that was revised and now experts believe the trust fund could run dry three years earlier. If this doesn’t serve as a call to action, what will?

The Seniors Trust believes lawmakers need to act right now to shore up the long-term solvency of Social Security. It wants Congress to pass the Social Security Expansion Act. This landmark piece of legislation would raise additional revenue by eliminating the income cap for social security tax.

Scrap the Cap

This year the annual wage cap limit is $147,000. Taxes are only collected on income up to $147,000 — anything above that is not taxed. Many people believe this is not fair because a person earning $147,000 pays the same amount in taxes as someone making $500,000 or millions. The Social Security Expansion Act calls for lifting the cap on Social Security taxes to ensure that the wealthiest Americans pay a fairer amount in relation to their income. The bill’s sponsors say doing so would “extend the solvency of Social Security for about 52 years to the year 2071.”