WASHINGTON — Social Security faces a $5.3 trillion shortfall over the next 75 years, but a new congressional report says the massive gap could be erased with only modest changes to payroll taxes and benefits.
Some of the options are politically dangerous, such as increasing payroll taxes or reducing annual cost-of-living increases for Social Security recipients. Others, such as gradually raising the age when retirees qualify for full benefits, wouldn't be felt for years but would affect millions.
Many wouldn't affect current recipients, according to the report by the Senate Special Committee on Aging. Sen. Herb Kohl, D-Wis., chairman of the committee, said small "tweaks" are all that is needed to bolster Social Security's finances for future generations of retirees.
Currently, 53 million Americans get Social Security benefits averaging $1,067 a month. In 75 years, 122 million, or one-fourth of the population, will be drawing benefits.
On its current path, Social Security is projected to run out of money by 2037, largely because of aging baby boomers reaching retirement. For the first time since the 1980s, Social Security will pay out more money in benefits this year than it collects in payroll taxes.
"Modest changes can be made over time that will keep the program in surplus," Kohl told the Associated Press. "They are not draconian, as the report points out, and they can be done and will be done."
The committee is scheduled to release its report today. The report, obtained by the Associated Press, lays out options for fixing Social Security but doesn't endorse any of them.
Kohl said lawmakers will probably combine several options to ease their impact. No action is expected this year, with midterm congressional elections in November.
The Social Security trust funds have built up a $2.5 trillion surplus over the past 25 years. But the government has borrowed that money over the years to spend on other programs. The government must now start borrowing money from public debt markets — adding to annual budget deficits — to repay Social Security.
The report will be presented to President Barack Obama's deficit reduction commission, which is expected to review entitlement programs in the search of savings.