New CBO Report Offers Yet Another Reason to Expand Social Security
by Nancy Altman and Eric Kingson, Founding Co-Directors of Social Security Works
Will today’s children inherit a nation with even greater income inequality than we have now? The Congressional Budget Office thinks so.
CBO just released its 2015 Long-Term Budget Outlook, which includes projections about the future of Social Security. Conservative commentators are using the CBO report to undermine confidence in the program by pointing out that Social Security’s shortfall — modest in size and still many years away — is projected by CBO to be larger than it estimated a few years ago.
But these projections include a shocking assumption: CBO is projecting increased income inequality in the future!
No question, rising income inequality hurts Social Security’s financing. While most Americans pay Social Security contributions on all of their earnings, the wealthiest pay on only a portion of their income. The rich contribute a smaller and smaller portion of their income to Social Security, while all or most of the wage growth goes to them. The result is that Social Security’s revenue is lower than what it would have been with a fairer distribution of income.