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Paul Ryan on Social Security

By Congressman Paul Ryan

Nearly 50 million Americans depend on Social Security during their retirement years. Social Security also provides critical benefits to widows and those with disabilities. Unfortunately, Social Security faces a $4.6 trillion deficit over the next 75 years (an amount equal to over one-third the size of the entire U.S. economy). As the Ranking Member of the House Budget Committee, one of my top priorities is to preserve the Social Security safety net and make sure the program remains solvent for future generations.

Fixing the Budget Process

The current federal budget process has a short-term focus and does not systematically review the huge and growing commitment the Federal Government is making for entitlement programs. While Congress and the administration thoroughly review discretionary programs annually and this spending must be appropriated in laws annually, discretionary spending represents less than half of the federal budget.

Because of this, my proposed plan, “A Roadmap for America’s Future” establishes a binding cap on total spending as a percentage of GDP (Gross Domestic Product) at the spending levels that are projected to result from the plan. It requires the President’s budget and the CBO (Congressional Budget Office) to make projections annually in comparison to these spending limits. It requires a comprehensive review of the long-term budget outlook every 5 years. If spending gets out of control again, and Congress fails to address the problem during the 5-year review, the proposal provides a mechanism to slow the growth in faster spending programs by no more than 1 percent, to bring spending back in line with the spending limits.

Social Security is Going Broke

Social Security is funded by the payroll taxes of current workers to pay the benefits of current retirees. At present, Social Security is running a surplus, meaning that there is more money being paid into the system than is needed to pay for benefits. In fact, the Annual Report of the Board of Trustees of the Social Security and Medicare Trust Funds reported that in 2006, the surplus was $199 billion. Unfortunately, Social Security will not continue to experience surpluses forever. According to the General Accounting Office (GAO), Social Security’s debt burden on every man, woman and child in America is $135,000. This is the cost of buying a home in many parts of Southeastern Wisconsin. In 2017, only eight years from now, Social Security will begin to pay out more in benefits than it brings in through payroll taxes. This will move the program into permanent and growing deficits. For every year Congress takes no action on Social Security, we lose approximately $300-$700 billion dollars. Even worse, the Social Security Trust Fund is expected to be completely exhausted by 2041. This will leave the program insolvent and unable to pay all of its promised benefits to seniors.

In addition, this surplus is a product of an intergovernmental transfer system. The Social Security surplus is given to the Treasury Department and replaced with IOUs. This intergovernmental transfer is different form normal government debt as we think of it, because when an individual buys a government bond, he or she has a financial claim against the government. When the government issues itself an IOU to one of its own accounts, it has not purchased anything or established a claim against another institution or person.

The main reason for the looming financial crunch is that our society is aging. The “Baby Boom” generation has already started to collect their Social Security retirement benefits. As a result, there are fewer workers to support each retiree than when Social Security was created. Increasing life expectancy and the approaching retirement of more Baby Boomers continues to put increasing pressure on Social Security each year. Between 2000 and 2025, the number of people age 65 and older is predicted to rise by 69 percent, while the number of workers whose taxes will pay for future benefits will grow by only 13 percent. Because of this, the number of workers supporting each Social Security recipient is projected to fall from 3.3 today to 2.2 in 2041. When comparing these figures with those from 1950 (when there were 16 workers for every 1 recipient), the changes in the program become clear.

Reforming the System

To meet this challenge and protect our children, I have introduced a comprehensive legislative plan called "A Roadmap for America's Future." This proposal recognizes the interrelated crises in health care, entitlement spending, the outdated Federal tax code, and our growing debt. Beyond Social Security, its components include health insurance, Medicaid and Medicare, as well as tax reform.

Social Security will be preserved for current retirees and those 55 and older. My plan starts by ending the raid on the Social Security Trust Fund. Workers under 55 will have the voluntary option of investing over one-third of their current Social Security taxes into personal retirement accounts. Those who decide to invest a portion of their funds into personal retirement accounts are guaranteed against a poor market outcome. No one’s total Social Security benefit from the personal accounts will be less than if they had chosen to stay in the current system. These personal accounts are likely to grow faster than the traditional benefit.

The personal retirement accounts have built-in safeguards to minimize risk, while still allowing for growth far above the chronically low rates of return in our current system. The real risk to individuals contributing to Social Security comes in the form of those clinging to the status quo. Current and future workers will be receiving returns that barely keep pace with, or even lag behind, inflation. If we do not place Social Security on sound financial footing now, there will be painful adjustments in the years ahead. In contrast, by allowing individuals to build real wealth through ownership, we would improve future seniors’ standard of living as well as help our children or grandchildren get a leg up in life through inheritable accounts. Unlike current Social Security benefits, you would have a legal right to your personal accounts. This would be your money, able to be used how you see fit, whether it be for a more comfortable retirement, setting up educational trusts for grandchildren, or providing for a charity. Combined with a more realistic plan for growth in Social Security benefits, and an eventual increase in the retirement age, the Social Security program can thus become sustainable for the long term.

The Roadmap I'm offering is a real plan, with real legislation and real numbers to back it. The full plan can be accessed at: I recognize that this is an ambitious proposal. Not everyone will agree with every aspect of it, and that's fine. But it is my sincere hope that it will spur Congress to move beyond simply rehashing the problem – to the politically difficult, but critical task of debating, and implementing actual solutions for the American people.

These problems are too big to grow our way out of, tax our way out of, or borrow our way out of. The problems are not Democratic problems or Republican problems – and cannot be solved exclusively using the political ideology of either party. I was happy to hear that President Obama is taking seriously the challenges of entitlement reform. While we may not necessarily agree on the specific solutions to this crisis, I look forward to working with him in a good faith effort to solve our entitlement crisis.

The unique American legacy is that each generation tackles its defining challenge and leaves the next generation better off. Previous generations have risen to the occasion and left America stronger, safer, and more prosperous for the next generation. This looming fiscal crisis is our defining challenge, and we must take decisive action if we are to uphold the American legacy.

Protecting Your Social Security Number and Your Identity

Workers need to keep their Social Security Number safe from identity theft and employers need tools to protect themselves from unknowingly hiring people who are in the country illegally. To address this without having a “big brother” government agency database, I, along with Congressman Sam Johnson, introduced the New Employee Verification Act. One way to enforce our immigration laws and secure our country from illegal immigration is to stop undocumented workers form being hired illegally. While it is the employer’s responsibility to hire employees who are in the country legally, the current employee document verification system, based primarily on paper documents, simply does not work. As a result, many undocumented workers have been hired through the fraudulent use of someone else’s Social Security Number (SSN) and identity.

My bill would replace the current unreliable, paper-based employment verification process that employers currently use with a user-friendly system called Electronic Employment Verification System (EEVS) and a voluntary Secure Electronic Employment Verification System (SEEVS). Under EEVS, employers would enter the employee’s data through a system already used to enhance child support enforcement. The Social Security Administration (SSA) and the U.S. Department of Homeland Security would then certify the accuracy of the information, make sure the name matches with the Social Security Number that is provided and verify U.S. citizenship. In addition, it establishes SEEVS, which is a network of private sector entities that could authenticate new employees’ identities utilizing existing background check and document screening tools. Participation by employers and employees is in this system is voluntary. Additionally, under my bill, employees would have the option to “lock” use of their SSN to protect it from identity theft. I am hopeful Congress will take immediate, bipartisan action on this legislation.

Congressman Paul Ryan serves Wisconsin’s 1st Congressional District. To contact him by phone in Washington, D.C., call (202) 225-3031. Or visit Paul Ryan at

Comments (2)
  • David Mallon

    Need more details for the 50 year olds that have been paying into the system for 25 years plus and have built up significant social security credits. With most of the private sector not receiving any type of pension, it is tough to understand the math involved in this.

  • Susan  - my suggestion for Social Security

    . I have a suggestion.
    Offer a ‘buy out’ to social security recipients for the balance of the principle they contributed to Social Security in the form of U.S. Government Bonds. The interest on the bonds should never be taxed and they would be inheritable.

    My husband and I are retired and approaching the age of 62 so we are aware of the financial impact this would create by not receiving a monthly social security check. However the stability of the non taxable interest from the bonds is palatable. Being able to pass the bonds on to our adult son and then to his children compensates for their loss of future social security.

    Well, that is my suggestion for the day. We are all watching and praying that you all get it right. We are standing on the edge of a cultural and economic precipice and it would be awful to step over.

    Thank you for your service to the Nation and thank you for listening

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