Social Security is in trouble and not just because its balance sheets are off-kilter, according to Eugene Steuerle, the Richard B. Fisher Chair at the Urban Institute.

Steuerle told the House Ways and Means Social Security Subcommittee on Thursday that the program is decreasingly able to meet its core objectives. More specifically, he said the program treats many Americans unfairly, deters work and personal savings, and is losing capacity to protect the poor and elderly.

“Every year we wait, we put more of the burden on the young,” said the former deputy assistant secretary of the Treasury for tax analysis. “If we encourage more work, we get more tax revenues than any tax raise [could]. [And] not adjusting the retirement age is like throwing money off the roof and hoping some of the poor get it.”

Since its creation, the system has morphed into one that generates a lot of regressive elements, he said.

For example, Social Security provides about $579,000 in lifetime benefits for an average-wage-earning couple retiring in 2013, and that number is expected to grow to $700,000 by 2030. At the same time, the government is forced to cut programs that benefit their grandchildren in order to tackle the debt and deficits, he said.

The crux of the problem, Steuerle told the subcommittee, is that Social Security has become a middle-age retirement system. That is, a couple retiring at age 62 today is expected to live about 28 more years, compared to a couple that would retire on average at age 68 in 1940 and live another 12 to 13 years.

With many baby boomers retiring, nearly one-third of Americans will soon be on Social Security and collecting almost three decades’ worth of benefits, he added.

Leaving the fiscal implications of this trend aside, Steuerle said, the system discourages middle-age Americans with numerous healthy years left, and a lot of professional experience, from working and contributing to the economy.

On top of that, too often, truly elderly Americans find they don’t have much retirement income left when they really need it, he added. Usually the reason is that they saved for fewer years than they could have, while spending more years enjoying retirement.

Most of all, Steuerle emphasized that Social Security doesn’t treat all citizens equally.

Among the disadvantaged he listed are:

• Working single heads of households,

• Couples with relatively equal levels of earnings,

• Long-term workers,

• Parents who have children in their 20s and 30s,

• Married couples that are close in age.

Subcommittee Chairman Sam Johnson, R-Texas, said he’s in talks with Ranking Democrat Xavier Becerra, D-Calif., to move legislation that can address many of these issues.

Steuerle encouraged the panel to move forward with reforms that could fix these issues and others in the near term. To do so, he said the lawmakers should consider:

• Creating a wage-indexed minimum benefit that would scale up the more years someone works. The idea would be to raise the minimum benefit level from where it is now to support those who need help most while preserving incentives to work longer for those who can.

• Increasing the earliest retirement age, currently 62, by one month per year, for the next 36 years. By doing this, the earliest retirement age would be 65 in 2050.

• Offering partial retirement options, as well as options to exchange money for a higher annual payment, also known as an annuity.

• Dropping references to the term “normal” retirement age. The hope would be to stop telling people when to retire.

“Unfortunately, the Social Security debate has largely proceeded on the basis of being ‘for the box,’ or ‘against the box,’” Steuerle said. “[But] the contents themselves deserve scrutiny.”

Photo by Matthew Johnson, Urban Institute