Letter: Governor Rick Perry is Wrong on Social Security Means Testing
|Written by Dean Baker|
|Wednesday, 12 October 2011 16:00|
The Honorable Rick Perry
Dear Governor Perry,
At a recent campaign stop in Iowa, you said that you are open both to raising the retirement age for Social Security and limiting benefits for upper-income people, or means-test the program. You summed up these suggestions by saying, “With no changes, [Social Security] won’t be there for [younger Americans] when they retire.”
A closer examination of Social Security and how benefits are distributed shows that these statements are not accurate. In fact, Social Security will be there for future generations even with no changes. And means testing the program for affluent beneficiaries would actually be an unnecessary cut in benefits for millions of retirees.
The facts are straight-forward. The recommendations of the National Commission on Social Security Reform in 1983 led to the growth of a large surplus in Social Security. This surplus was used to buy bonds and now Social Security holds more than $2.6 trillion in government bonds. As a result, the Congressional Budget Office’s projections show that the program will maintain full solvency through the year 2038. Even if Congress never makes any changes to the program, Social Security will be able to pay slightly more than 80 percent of scheduled benefits from then on and will indeed be there for younger Americans.
Also worthy of consideration is that the vast majority of Social Security beneficiaries are lower- to middle- income people. The number of beneficiaries considered affluent is far too small to raise any significant amount of revenue through means testing and in the process, the program’s administrative costs would actually go up.Social Security has continued to be a topic of debate during this campaign season. I hope you and your staff will have the opportunity to further review the design and finances of the program as you prepare future public statements on the topic. If you would like any additional background on the program, I would be happy to assist you.