I ask for your vote for Senator not to solve our nation's problems, but only to acknowledge them. Oh, and God Bless America.

Dear Friend:

Thank you for contacting me regarding the future of the Social Security system. I welcome your thoughts and comments.

The Social Security program is financed by the Federal Insurance Contributions Act (FICA) tax, a payroll tax that is collected from today's workers and used to pay benefits to those seniors currently drawing from Social Security. The FICA tax is levied on both employees and employers on wages up to a limit of $106,800. Traditionally, the Social Security tax is 12.4% of wages and is split evenly, with the employee’s share of the tax at 6.2% of gross compensation and the employer subject to an additional 6.2% FICA tax. However, through the extension of the broader tax relief of 2001 and 2003, the employee share of the FICA tax is reduced to 4.2% of gross compensation for 2011. To make up for the lower FICA taxes, the Treasury Department is authorized to transfer funds equal to the amount that would have been contributed into Social Security Trust Funds in normal years.

The Social Security Board of Trustees reports to Congress on the status of the Social Security Trust Funds. The trustees project the balance of the Social Security Trust Funds to peak in 2024 but to be fully depleted in 2037. Thus, while the Social Security program is sound for today's seniors and for those nearing retirement, it needs to be improved for our children and grandchildren.

The impending financial problems of the Social Security program are why Congress must work together now to strengthen Social Security for future generations. The longer we wait, the more difficult and costly it will be to fix the problem. Every year that passes adds $600 billion in unfunded liabilities that the next generation will have to pay.

Congress is considering a wide range of reforms, including proposals to raise the retirement age or increase the cap on the FICA tax. I will continue to evaluate any plan to reform Social Security by how well it protects current recipients while ensuring the soundness of the system for future generations.

I appreciate hearing from you, and I hope that you will not hesitate to contact me on any issue that is important to you.

Sincerely,
Kay Bailey Hutchison
United States Senator