Imagine a country where the vast majority of seniors live in poverty, a country where for many there are no golden years, but a time of struggle and dependence. That was the United States before the creation of Social Security, which has proven to be one of the most effective and important government programs in our history. In 1935, the year Social Security was created, the poverty rate for seniors was over 70%. Today, as we celebrate Social Security's 80th birthday, the poverty rate for seniors has been reduced to roughly 10%. We still have a lot of work to do to fight poverty among seniors and all Americans, but thanks in part to Social Security, real progress has been made.
For 80 years, Social Security has made our country stronger, helped working Americans retire with dignity and grown the middle class. As we celebrate Social Security's success, we must also commit to protecting and preserving the program for decades to come. I am dedicated to making sure Social Security will be there for future generations and have written legislation to strengthen the program.
Despite the incredible success of Social Security, a tremendous amount of misinformation exists about the program. Social Security is not broke and Social Security does not need to be privatized. Social Security has worked extremely well for 80 years and with small recalibrations to respond to an aging population, Social Security can remain healthy for generations to come and provide stronger benefits for those most in need.
On August 14, 1935, President Roosevelt signed the Social Security Act into law. Roosevelt called Social Security "a hope of many years' standing" and stated that the program was designed to give "some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."
The first lump sum payments were made in 1937 and in 1940 the first monthly Social Security payments began. Social Security is funded by a payroll tax on wages. Those funds go to a trust fund that pays benefits to current retirees and their families, as well as disabled Americans and their families.
Maryland Congressman David Lewis played a leading role in the legislation that created Social Security. Lewis, a Roosevelt ally from Cumberland, represented Maryland's Sixth District in the House. Lewis filed the original piece of Social Security legislation, but shortly thereafter it was re-introduced by the Chairman of the Ways & Means Committee. Nevertheless, Lewis remained a strong advocate for the bill and stood next to President Roosevelt when he signed the legislation on August 14, 1935. Congressman Lewis, who worked as a coal miner before becoming an attorney and elected official, helped transform the country for the better and I'm proud to follow in his footsteps in representing the Sixth District today.
In 2014, 59 million Americans received Social Security benefits, including nine out of ten seniors. According to a 2013 study by the Center on Budget and Policy Priorities, Social Security payments keep over 20 million Americans out of poverty, including over 200,000 Marylanders. For many seniors, Social Security is their primary source of income.
Make no mistake, Social Security is not broken and is not failing.
Last month, Social Security's Board of Trustees released their latest report on the status of the program. Their report found that Social Security is in good shape in the short term and that Americans near retirement age have little to be concerned about. However, demographic trends will put long-term pressure on Social Security. It is important that the long-term challenges facing Social Security are acknowledged in a factually-accurate way. We won't enact good public policy by exaggerating problems or ignoring them to fit an ideological agenda.
In 1940, only 6.8% of the population was over 65, while the federal government's Administration on Aging projects that by 2030 19% of the population will be over 65. Because of the aging of the U.S. population, the Trustees estimate that Social Security will hit insolvency by 2034. If Congress fails to act, this could mean drastic cuts at that time. To avoid this problem, I've filed legislation to make Social Security solvent for the next 75 years. My bill would create a bicameral and bipartisan commission tasked with coming up with a long-term solution. The commission's recommendation would then be voted on by Congress.
I believe that any adjustments to Social Security must be grounded in a sense of justice, with special consideration given to protecting those who are most in need. This means enhancing benefits for the very old, increasing benefits for the most vulnerable, and ensuring that caregivers receive the benefits they deserve. To pay for these changes and to maintain solvency, we should first raise the cap on payroll tax contributions. Right now someone earning $119,000 and someone earning $10 million dollars a year make the exact same real dollar contribution to Social Security. Raising the cap and adding a second threshold for very high incomes will give Social Security additional revenues it needs. We should also adjust the inflation calculation to reflect more accurately the changes in costs faced by seniors.
It would be a terrible tragedy if rampant partisanship derailed one of the greatest legislative accomplishments in our history. Let's put aside the rhetoric, focus on the facts, and protect Social Security. Social Security transformed America for the better in 1935 and on its 80th birthday, let's make sure the program is still healthy on its 100th and 150th birthdays as well.