Happy 75th birthday, Social Security.
On Aug. 14, 1935, President Franklin Roosevelt signed the Social Security Act and changed the lives of millions.
But will Social Security survive to see another 75 years or more?
Its long-term solvency remains in question. And staunch supporters worry that benefit cutbacks might be unavoidable now that President Barack Obama's deficit commission is looking at Social Security. A report is due in December.
The program needs shoring up. For the first time since 1983, Social Security will pay out more in benefits this year and next than it takes in through payroll taxes, according to the latest annual report. The shortfall stems from high unemployment, which left fewer people paying taxes and more older workers signing up for benefits.
Surpluses are expected to return in 2012 for a few years before costs again exceed revenues. By 2037, Social Security's fund will be exhausted, and taxes will cover only 78 percent of promised benefits.
Social Security accounts for 40 percent of the typical retiree's income, and almost all of the income for elderly singles. The program has lifted nearly 20 million people out of poverty, including 161,000 older Marylanders, reports the Center on Budget and Policy Priorities. And without Social Security, the nation's elderly poverty rate would be about 45 percent, instead of 9.7 percent.
Opinions about Social Security run strong and deep.
"It was a terrible idea to begin with," says Paul Cleveland, an economics professor at Birmingham-Southern College. He compares Social Security to a Ponzi scheme in which the first in get paid while later victims lose out.
Daniel Hamermesh, economics professor at the University of Texas at Austin, counters: "It is the most successful domestic program of the 20th century."
Ideas to fix Social Security fall into two camps: Cut benefits or raise taxes.
Republican Rep. Paul Ryan, a member of Obama's deficit commission, wants to reduce benefits for those under 55, but allow them to invest one-third of their Social Security taxes in private accounts.
House GOP leader John Boehner suggested raising the full-benefit retirement age to 70 and adding a means test so high-income retirees wouldn't get benefits.
Others recommend subjecting more wages to Social Security taxes or bumping up the tax rate. Nancy Altman, author of "The Battle for Social Security," says a 0.5 percent tax on financial transactions would eliminate any shortfall.
In 1983, Social Security was months away from not being able to mail checks before Congress acted. Legislators shouldn't wait so long this time. The sooner they act, the more options they have and the less painful it will be on workers and retirees.