In France, labor unions and workers have taken to the streets to protest the government’s plans to raise the retirement age from 62 to 64 while, in America, 67-year-old retirees are facing severe cuts to their Social Security benefits due to inaction by President Biden and Congress.
The changes proposed French President Emmanuel Macron have sparked widespread demonstrations and strikes across the country, with workers arguing that the changes would be unfair to those who have already contributed to the retirement system.
The Social Security Trust Fund, which has been built up over years of robust income, is now facing depletion, and many retirees are worried about the future of their benefits but few Americans are taking any real action.
“The concepts of solvency, sustainability, and budget impact are common in discussions of Social Security, but are not well understood. Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits,” said the Chief Actuary of the Social Security Administration, who has modified that projection to 2033.
“As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted,” said Stephen C. Goss in a 2010 memorandum. “At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits.”
“After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086,” said another Social Security Administration paper published in 2012.
The ‘powers that be’ have known for decades that the Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits only for a limited time and yet they took no corrective action however, there is hope for a solution.
Lisa McCormick, a progressive political activist, has proposed along with other advocates “scrapping the cap” to save the program.
This proposal would involve eliminating the cap on income subject to Social Security taxes, which currently only applies to the first $160,200 of a worker’s income.
By eliminating the cap, higher earners would contribute more to the Social Security program, ensuring that it remains financially solvent for future generations.
This proposal has garnered support from some progressive politicians and activists, but it remains to be seen whether it will be implemented by the current administration.
As workers in France continue to fight for their retirement rights, American retirees are more timid about calling for action to protect their Social Security benefits.
With the proposed “scrap the cap” solution, there is hope that the program can be saved and strengthened for future generations.
However, it will require political will that does not exist in Washington DC at this time to ensure action to make this proposal a reality.