Despite the various Social Security proposals from both political parties and the handful of Presidential hopefuls, we never hear anyone calling for a complete elimination of Social Security, and an understanding of the federal budget helps explain why. Social Security is one of a handful of mandatory programs. Federal law requires that the federal government pay mandatory programs. In order to cut Social Security benefits, it takes an act of Congress, and cutting people’s benefits, regardless of political party affiliation, is rarely a way to win votes.
Mandatory spending is money that Congress has to pay. It consumes about 70 percent of the new budget and includes programs like Social Security, Medicare, Medicaid, interest on public debt, military pensions, and veterans’ benefits. Medicare and Medicaid comprise the largest portion of mandatory spending followed by Social Security and public debt interest.
These programs comprise the remaining 30 percent of the budget and are subject to cuts every year as Congress debates what to fund. Unlike mandatory spending, Congress does not have to pay discretionary funding and makes discretionary funding decisions year-by-year. The largest portion of discretionary spending goes towards the Defense Department and military operations. The budget of all other federal programs (including Social Security’s administrative costs) falls under discretionary spending.
Will the Payroll Tax Cuts Move Social Security Towards Discretionary Spending?
Since Social Security falls under mandatory spending, Social Security benefits will still be paid at normal rates despite the payroll tax cuts, but the money will be coming from revenue that goes towards discretionary spending. This puts Social Security benefits on less stable ground and could possibly force Congress’s hand in reducing Social Security benefits or moving Social Security into discretionary spending, which would have a big impact on the approximately 60 million Americans who receive Social Security benefits of some sort.
Are you a Social Security beneficiary? How would a change in Social Security impact you if benefits were cut or if benefits were uncertain year to year?
Troutman & Troutman, P.C. – Tulsa Social Security disability attorneys