Social Security is NOT Congress’ Rainy Day Fund

The past several years, we’ve seen an alarming legislative trend:

Asking young Americans to trade their future Social Security benefits for repaying their student loan debt.

Asking new parents to trade their future Social Security benefits for parental paid leave.

And now, suggesting the next COVID-19 pandemic stimulus comes from Social Security.


In this most recent proposal, put forth by members of the American Enterprise Institute and the Stanford Graduate School of Business, the authors examine the possibility of issuing the next round of direct payments in return for deferred Social Security benefits.

Proponents of the idea call it a deficit-free stimulus measure. Unlike the Economic Impact Payments issued in May, letting Americans borrow against their retirement benefits would function more like a loan than direct stimulus. Since borrowers would effectively repay the loan by pushing back their retirement age—and ultimately receiving less lifetime Social Security benefits—supporters tout the idea as deficit-neutral.

Mathematically, that’s true. In 30, 40, or 50 years when the young workers most likely to apply for this direct payment will reach retirement age.

But what about right now?

Right NOW, the Social Security Trustees project the Social Security Trust Fund will fail to be able to pay full scheduled benefits by 2035. In just 15 years.

And keep in mind: 15 years was the estimate the Trustees reported BEFORE the Coronavirus recession. This estimate does NOT include data related to corporate bankruptcy, business closures, mass lay-offs, and rising unemployment. With so many workers and their employers no longer contributing to the Trust Fund (and likely filing for early retirement to regain their lost income), it’s unrealistic to think Social Security’s solvency isn’t being affected.

Long-term mathematics aside, what would asking potentially millions of Americans bearing the weight of our economic burden to cash out their Social Security benefits early do?

It would take an already insolvent program and drain unspeakable amounts of money from it, putting current day and near-future retirees at even more risk than they are right now. Our present day Social Security beneficiaries rely on the program RIGHT NOW. It makes no difference to them whether the “loans” young Americans take out now get paid back in 30 years.

There are other valid criticisms of tempting young workers with immediate relief for their immediate problems. Who among us looks back on their decision-making at age 20 and doesn’t wish we could have known what we know now?

If those people exist, they’re certainly in the vast minority. Most young workers worry about saving to buy a car, a home, paying off their schooling, or just finding a way to pay for rent, bills, and food on a small income. With decades of working life ahead of them, retirement is a vague and faraway concept. A lot of young people don’t even believe Social Security will be there for them when they retire. So, why wouldn’t they cash out now if they’re suffering hardship? Even if they may be completely shooting themselves in the foot farther down the road?

But the most glaring problem with this idea should this: why is the only idea Congress can put forth to solve our nation’s ills draining money out of Social Security?

Social Security is not some Rainy Day Fund for Congress to tap when Americans need help. And if it IS a Rainy Day Fund, it’s the one millions of Americans have created for themselves to use when they choose to retire. It’s Congress’ responsibility to help us work through our problems—not to make us choose between being suffering now or suffering later.

And they NEED to remember those who are in no position to make these choices for themselves. Our retirees today are being abandoned by these proposals. They don’t benefit from new options to control student loan debt, take time off to raise children, or receive this kind of stimulus. But they will definitely lose when the income they depend on gets slashed into ribbons.

Even if retirees DID support measures like this: there just isn’t enough money. Full stop.

Like the previous two incarnations of this policy, it is very unlikely a measure like this—if it was to become a bill—would ever pass into law. Very few people want to see anything come out of their Social Security that isn’t Social Security-related.

The alarming thing is even with everything happening right now—with seniors being the most at-risk group, both medically and economically—there is no stopping our elected officials from thinking Social Security is a limitless credit line. Nothing more than a giant piggy bank.

These proposals have to stop.

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