By Kate Schmidt-Hopper
It might not come as a surprise that our Lake County economy is reliant on Federal tax dollar allocations, much of that coming through the Social Security Administration (SSA).
18,000 Lake County households receive some form of SSA benefits. This includes retirement benefits earned during working years of 10 years or more, income to which retirees are entitled through payroll contributions (FICA) into the SSA Trust Fund. Additional recipients of SSA funds are those with disabilities or blindness and “Survivor” or “Family” benefits to minor children, spouses, ex-spouses, a dependent parent, and some grandchildren who meet the requirements. Supplemental Security Income (SSI) is also available to alleviate extreme poverty. (source: SSA). “In 2019-2023, 16.7% of people [in Lake County] were in poverty.” (source: Datahood)
The Lake County economy benefits from SSA distributions to the tune of $29 million/month or $350 million/year.
Recent changes were made to SSA to “rectify” claims of “waste, fraud and abuse” — Let’s consider “fraud”: the incidence of improper payments in 2023-24 was less than .5 of 1% of all payments throughout the SSA national system. Of that small number, fully one third resulted from identity theft. Much was made of SSA payments being made to “dead people,” which turned out to be an incorrect understanding of SSA recipient coding systems. People were forced to contact SSA and their local Congressional representative to be reinstated to the system by “proving” they were not dead!
What about waste? SSA is essentially a national “insurance” system to provide retirement with dignity and senior health insurance through Medicare. So, let’s consider administrative expenses to benefit outlay. SSA has a 1.2% cost of administration built into the “insurance” organization. Corporate insurance companies compare at 23.5%/Liberty Mutual and 19.4%/Allstate.
Despite this already low administrative cost, staffing is now at a 50 year low. This has a direct impact on customer service. For example, customer service via telephone wait times was reduced to 12.5 minutes in 2023-4. This was accomplished with a ratio of 14 telephone customer service employees/10,000 beneficiaries. The current ratio is 7/10,000. SSA has removed the customer feedback/ satisfaction survey from the website. Some SSA offices have been forced to close, eliminating in person customer service.
Forced retirement to reduce staff has increased the burden of the SSA Trust Fund through use of Fund proceeds to provide staff buyouts, hastening the potential date of Fund insolvency. Combined with reduced tax monies infusions into the fund as a result of HR-1 2025/OBBBA, this date is now projected to be at the end of 2032. Insolvency would trigger potential mandatory across the board benefit reductions of up to 24%.
HR-1/OBBBA made changes to SSA Trust Fund contributions by creating a new temporary “senior deduction” which may reduce the tax burden of seniors 65 and over who meet specific income requirements. This deduction won’t be available to seniors over or below the specific income level, or those receiving survivor, family or disability benefits. 64% of seniors who receive SSA benefits already pay no taxes on their SSA incomes. Please read the provided spreadsheet on changes to SSA as a result of HR-1/OBBBA.
One suggestion proposed many times in Congress but never acted upon is to raise the “wage-base unit” for payroll contributions into the SSA Trust Fund. That income level currently stands at the first $176,000/year on an individual’s earnings. Income above that is exempt from the 6.2% OASOI tax and employer contributions. (source: IRS). For context, in California, 31% of the population earn between $100-200K/year. In Lake County households (up to family of 4), 7.1%. (source: Datahood)
Other Sources:
https://fb.watch/ASy-jJ4IGt/?
https://www.npr.org/2025/07/11/nx-s1-5459955/social-security-megabill-trump-tax-cuts
https://www.cnbc.com/2025/07/07/why-big-beautiful-bill-doesnt-end-taxes-on-social-security-benefits.html
https://govfacts.org/explainer/how-the-one-big-beautiful-bill-impacts-social-security/
https://www.crfb.org/blogs/obbba-would-accelerate-social-security-medicare-insolvency