NCPA - National Center for Policy Analysis

Congress Could Guarantee Seniors' Benefits

March 14, 2002

Some opponents of Social Security reform have scared senior citizens by claiming their benefits will be cut if personal retirement accounts are adopted. One way to reassure these retirees, says a recent Heritage report, is to guarantee their benefits in writing.

Current law says that anyone who meets the requirements to receive Social Security has a legal right to the level of benefits for which he or she qualifies. But Congress has never explicitly guaranteed any level of specific benefits for recipients, and the courts have held beneficiaries have no property right to particular benefits. Thus, for instance, after decades of expanding benefits beyond what seniors expected in return for their payroll tax payments while working, benefit and tax changes adopted in 1983 reined-in the rate of growth of benefits and increased payroll taxes for future retirees.

Republican congressional leaders have proposed to issue retirees a written guarantee of benefits, mostly in order to counter Democrats' insinuations that Republicans will cut benefits at some future date. Supporting the idea of a guarantee, Heritage analysts point out:

  • Guarantees will not prohibit future Congresses from someday reducing Social Security benefits of retirees, but would ensure that such a move would have severe political implications.
  • Guarantees would not affect the solvency of the trust fund or make reform more expensive; however, when the trust fund run out, Congress will have few choices: raise taxes or increase borrowing to pay promised benefits.

With every year that Congress delays serious Social Security reform, finding ways to keep its promises to future retirees will get harder. No serious reform plan calls for cutting current retirees' benefits, with or without guarantees, but Congress could still reduce the benefits of younger workers if it chooses.

Source: David C. John, "Guaranteeing Retirees' Social Security Benefits: An Important First Step Toward Reform," Executive Memorandum No. 804, March 8, 2002, Heritage Foundation.


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