The Social Security Administration collects payroll taxes and uses the money collected to pay benefits to those above a certain age, survivors of recipients, and through disability insurance by way of “trust funds.” When the program runs a surplus, the excess funds increase the value of the aggregate federal “Trust Fund.” The Fund is required by law to be invested in non-marketable securities issued and guaranteed by the “full faith and credit” of the federal government, which earn a market rate of interest. However, sometimes these funds are directed by Congress to be used elsewhere to pay for intra-governmental debt or fund projects, leading to more government waste.
The House GOP in Washington is now acting to ensure that the money used to fund Social Security, and even Medicare, is used correctly, not just wasted on frivolous government projects and debt payoffs.
This week, a Virginia Republican signed on as an official co-sponsor of a new congressional measure to ensure protection over federal dollars used to fund Medicare programs and Social Security. Originally introduced in 2017 by Republican Tim Walberg (MI-7), the Social Security and Medicare Lock-Box Act (H.R. 1218) amend titles II and XVIII of the Social Security Act, which provides for a suspension of amounts of investments held in Social Security and Medicare accounts until a future enactment of legislation that provides for investment of the Trust Funds in investments other than “obligations” of the U.S., according to the bill.
“For years I have said we need a lock box on Social Security to prevent any Congress from using our money elsewhere. The same goes for Medicare,” Congressman Scott Taylor (VA-2) said, who is now carrying the legislation.
The bill sets the establishment of “surplus protection accounts in the Federal Old-Age and Survivors Insurance and Federal Hospital Insurance Trust Funds,” as stated in a news release. The bill further directs the Managing Trustee of each fund to transfer the annual surplus to its respective account and prohibits investing money from the account in any investment vehicle other than U.S. obligations unless otherwise specified by law.
Taylor opined, “There has been a longstanding practice in Washington of using Social Security surpluses to pay for other government projects and programs.”
Due to this, at the federal level, a Social Security and Medicare Part A Investment Commission will be directed to make recommendations for alternative forms of investment of the surplus amounts of Social Security and Medicare funds.
“These are not just vital retirement programs but a promise from our government that elderly Americans can safely retire with dignity,” Congressman Taylor added. “We owe it to our seniors, and those yet to retire, to keep this program solvent for all Americans, which is exactly what this bill does.”
As stated in the 2016 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, “the assets of the combined Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund will be exhausted by 2034, and the Disability Insurance Trust Fund alone will be depleted by 2022,” according to the bill. Furthermore, the assets of the Federal Hospital Insurance Trust Fund will be exhausted by 2028, as reported by the Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds from 2016.
The new legislation will protect the solvency of the trust funds while avoiding subjecting beneficiaries and taxpayers to unanticipated program changes, especially those who already significantly dependent on program benefits.