Warning: Republicans Are Plotting To Raid Social Security
Donald Trump is obsessed with defunding Social Security. In the midst of a catastrophic pandemic, millions of Americans are facing eviction and hunger if Congress doesnt act now to extend unemployment benefits. Essential workers are in desperate need of testing and protective equipment.
But Trump doesnt care. He has threatened to veto any COVID aid package that doesnt include a cut to the payroll taxSocial Securitys dedicated revenue. On Monday, Minority Leader Kevin McCarthy ;announced;that Congressional Republicans are on board with Trumps plan to defund our earned benefits.
As a response to the economic crisis, with 40 million unemployed in just the last few months, cutting Social Security contributions makes no sense. They are a poor economic stimulus. The money is paid out slowly over many months and fails to get cash into the pockets of;those who need it most;and will spend it immediately. Those shortcomings defeat the purpose of stimuluscreating needed economic activity. The only reason to support this policy over better targeted, more efficient measures is if your true goal is to undermine Social Security.
When reporters asked Senator Chuck Grassley for his thoughts on the Republican proposal, his response was refreshingly honest. Grassley;worried;that it might create political problems because Social Security people think we’re raiding the Social Security fund. And we are raiding it…
Republicans Aren’t Going To Take Away Social Security
Without beating around the bush, the Republican Party is often associated as being the party of the well-to-do — and the rich typically aren’t reliant in any way on Social Security income. There’s, therefore, been a long-running belief that Republicans would aim to do away with Social Security sometime in the future. This is nothing more than another in a long line of pervasive Social Security myths.
Both Democrat and Republican lawmakers on Capitol Hill have an understanding of the importance that Social Security plays in keeping some 22 million people currently receiving benefits above the federal poverty line. Though both parties may have suggested tweaking how revenue is generated for the program, neither party would remove or replace any of the three funding sources: the payroll tax on earned income, the taxation of benefits, and interest income on the program’s asset reserves.
In other words, no Republican is going to advocate scraping Social Security. And even if they did, the idea would have no chance of gaining traction in Congress.
They Haven’t Taken A Dime From The Social Security Program That Isn’t Accounted For
Another misconception is that the Republican Party stole money from the Social Security Trust and used it to fund wars. More specifically, Ronald Reagan, George H.W. Bush, and George W. Bush have come under intense scrutiny for borrowing from Social Security and “not putting the money back.”
However, the truth of the matter is that Congress has been able to “borrow” Social Security’s excess cash for five decades, and it’s happened under every single president over that stretch. In fact, the Social Security Administration is required by law to purchase special-issue bonds and certificates of indebtedness with this excess cash. Please note the emphasis on “required by law” that I’ve added above. The federal government isn’t simply going to sit on this excess cash it borrows from Social Security. It’s spending this cash on various line items, which may be wars and the defense budget, as well as education, healthcare, and pretty much any other expenditure you can think of.
This setup is actually a win-win for both parties. The federal government has a relatively liquid source of borrowing with the Social Security Trust, and the Trust is able to generate significant annual income from the interest it earns on its loans. Last year, $85.1 billion of the $996.6 billion that was generated by the program came from interest income.
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How Urgent Is The Problem
The public already is pessimistic about Social Securitys future. A Pew Research Center study released last March found widespread worry among todays workers about the programs future 83 percent expected benefit cuts by the time they retire, and 42 percent did not expect to receive any benefits in retirement.
The public worry is understandable, but out of proportion, says Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities, a left-leaning think tank. The odds that benefits are going to disappear are as close to zero as possible, he said. But the continual talk about the financial problems leads people to worry excessively about it.
Despite public sentiment and trust fund projections, the next president and Congress may not feel pressure to act during the next four years. Much will depend on the balance of control in Congress and the White House.
The more power Democrats have, the more likely it is that there will be action, said Ms. Altman of Social Security Works. If Republicans stay in power, they will try for a bipartisan solution, but Democrats wont go for benefit cuts.
If the problem is not solved before the 2035 depletion date gets near, experts note that odds will favor restoring solvency to the trust funds with new revenue rather than benefit cuts.
What You Should Know About The Gop And Social Security
Who’s to blame for this mess? Well, some Americans would point their fingers specifically at Republicans in Congress. While they absolutely do take some of the blame, the inaction by Republicans and Democrats on Capitol Hill makes them equally culpable in exacerbating Social Security’s problems.
When it comes to Republicans and Social Security, here are the four things you absolutely need to know.
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Do Republicans Misunderstand Social Security Or Just Feign Ignorance
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As a follow-up to our Tuesday post on the House GOPs assault on Social Security and its beneficiaries, its proper to take a closer look at the rationale for the attack.
To recap, the GOP caucus passed a rule making it much harder, if not impossible, to reallocate Social Security payroll tax revenue from the programs retirement fund to its disability fund. The latter is in imminent trouble, expected to run out of reserves next year. At that point, disability benefits will have to be slashed about 20%.
Reallocation is a crucial near-term fix, and something thats been done nearly a dozen times since the 1980s to keep both the disability and old-age funds solvent. The new GOP rule allows any member to block it.
Kathy Ruffing of the Center on Budget and Policy Priorities points us to this explanation from the provisions sponsor, Rep. Tom Reed of New York. His intention, he says, is to force us to look for a long term solution for SSDI rather than raiding Social Security to bail out a failing federal program. Retired taxpayers who have paid into the system for years deserve no less.
Ruffing calls this a revealing statement. So it is, in the sense that a big red F on a school paper reveals a pupils profound lack of understanding.
The balls in your court, Rep. Reed. Lets see your next move.
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Republicans Have A Plan To Cut Social Security And Medicare
Jake Johnson reports in Common Dreams that Senator Lindsey Graham is using the Republicans leverage in Congress to cut Social Security and Medicare. Only if Democrats agree to these cuts would Republicans agree to raise the federal debt ceiling.
Americans pay into Social Security and Medicare throughout their working lives. They earn these benefits. Alex Lawson, Social Security Works, explains that Lindsey Graham and his fellow Republicans will stop at nothing to cut the American peoples earned Social Security and Medicare benefits.
Its apparently not enough that millions of retirees live in poverty or on the edge of poverty, that they are forced to go without healthcare, that they are dying prematurely. Medicare and Social Security help millions of people stay afloat. But, the Republicans want a commission to cut Social Security and Medicare as the price for raising the debt ceiling.
Meanwhile, Senate Democrats are working on a plan to raise the debt ceiling. They really should be voting to eliminate it altogether. Either way, Republicans will try to keep the Democrats from getting this done easily and swiftly. But, failure to increase or eliminate the debt ceiling could lead the federal government to defaulton its payments.
Democrats could raise or eliminate the debt ceiling without Republican support, through the budget reconciliation process. To do so, they would need every Democratic Senator supporting the debt ceiling increase or its elimination.
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Republican Senators Push Social Security Medicare And Medicaid Cuts After Supporting Ineffective Tax Cuts
Republicans Target Social Security, Medicare and Medicaid
The economy is recovering from the depths of the pandemic in large part due to the massive relief packages that Congress passed in 2020 and 2021. Just in time for this recovery, Senate Republicans are pushing for cuts to vital programs. According to news reports, five GOP senators are proposing a commission that would come up with proposals to balance the federal budget within a decade. Given that four of the five sponsors of this idea have signed on to the tax pledge to never, ever under any circumstances raise taxes, they are looking for programs to cut. They consequently take aim mainly at cuts to Social Security, Medicare and Medicaid.
These targeted programs are already and will continue to prove crucial to the financial and physical health of millions of Americans that have suffered from the pandemic. Many workers, especially older ones, have lost their jobs permanently and will move into early retirement with permanently lower benefits and little or no savings outside of those benefits. Millions of Americans, again particularly among older ones, experience long-term consequences from COVID-19, the disease caused by the novel virus. Those hardest hit by pandemic will need strong, expanded retirement and health benefits, not cuts to an already basic system.
The Republican Obsession With Dismantling Social Security And Medicare
The Republicans are desperate to destroy Social Security and Medicare. These two programs demonstrate government at its best. The federal government runs these two extremely popular programs more efficiently, universally, securely, and effectively than the private sector does with its alternatives or indeed could, no matter how well those private sector programs were designed.
Because Social Security and Medicare are government programs that work so well, the Republican elite with its seemingly religious belief that the private sector is always the best hates them. So obsessed are the Republicans in their desire to eliminate these effective government programs that the very first action that House Republicans took in the new Congress was to adopt a rules package that included a new rule that amounts to a stealth attack on Social Security and Medicare.
The rules package, adopted at the start of every new Congress, sets out how the chamber will operate for the next two years. This years package is already infamous for provisions in the initial version that would have gutted the Office of Congressional Ethics provisions that were ultimately dropped after a massive outcry from the American people. Unnoticed by most was an additional provision, which is one part of the Republican game plan to destroy Social Security and Medicare.
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Don’t Count On A Switch To The Chained Cpi Anytime Soon
Now, before you start worrying about a reduction in your current or future Social Security benefit check, let me caution that a switch to the Chained CPI from the CPI-W appears highly unlikely anytime soon.
For one, President Trump has been pretty adamant about not making direct changes to the Social Security program. Trump has argued that indirect solutions that boost economic growth, thereby leading to an increase in payroll tax collection, should be more than enough to improve the health of the program.
More important, there would need to be bipartisan cooperation in Washington in order to pass such a measure; and none exists right now. Any amendment to the Social Security program requires 60 votes in the Senate, and it’s been four decades since either party had a supermajority in the upper House of Congress. There’s virtually no way Democrats would support switching to the Chained CPI when they have their own inflationary tether change proposal on the table.
Since 2000, the purchasing power of Social Security income has fallen by 33%, and it doesn’t look as if this trend will slow anytime soon.
Advocates Alarmed By Gop Leaders Embrace Of Trump Payroll Tax Cut
House GOP leader Kevin McCarthy: next COVID bill to include Trumps payroll tax cut proposal
President Trumps push for a payroll tax cut has received the blessing of GOP leadership on Capitol Hill, who promise that the proposal will be included in new Coronavirus relief legislation.;;Some Republicans and almost all Democrats oppose payroll tax cuts. But the proposal gaining a foothold on Capitol Hill has understandably alarmed Social Security and Medicare advocates and is receiving fresh scrutiny in the media.
Make no mistake:; payroll tax cuts are the first step in dismantling Americans earned benefits.; In acceding to the Presidents payroll tax ploy Republican leadership makes plain that they stand with those who least need help and against American families struggling every day to make ends meet. Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare
Trump to Social Security:;;Drop Dead reads the headline for Michael Hiltziks recent column in the;Los Angeles Times, echoing one from 45 years ago in the;New York Daily News.;;That headline, Ford to City:;;Drop Dead, chiding President Gerald Ford for seemingly refusing to bail out New York City in the depths of a fiscal crisis, was credited with his failed re-election bid.;Hiltzik clearly feels the stakes are similarly high for President Trump in pressuring Congress to cut the payroll taxes that fund Americans earned benefits.
Social Security Is A Little Over 15 Years Away From Big Problems
But as you’re also probably aware, it’s a social program that’s seen better days. A slew of ongoing demographic changes have weakened Social Security’s long-term outlook. In fact, the latest Board of Trustees report projects that big changes are brewing in 2020.
The newest report suggests that, for the first time in 38 years, Social Security will expend more than it collects in revenue next year. This accounts for the benefits it pays, which comprise about 99% of the program’s outlays, as well as general and administrative expenses for the agency, and transfers to the Railroad Retirement exchange. With each passing year after 2020, this net-cash outflow is only expected to grow in size.
The frightening prognostication offered by the Trustees is that Social Security will have completely exhausted its asset reserves — i.e., the net-cash surpluses built up since its inception by 2035. If and when this excess capital disappears, retired workers and future generations of retirees could be facing an across-the-board benefit reduction of up to 23%. While there is a silver lining in that Social Security won’t go bankrupt, there’s still not much solace for the 62% of current retirees leaning on the program for at least half of their monthly income.
The big question is: How do we resolve this dilemma?
They Aim To Fix Social Security Through Long
Finally, Republicans do want to fix Social Security, but they are at the opposite side of the spectrum from Democrats on how to do that. Whereas Democrats prefer raising revenue to make up for an expected $13.2 trillion cash shortfall between 2034 and 2092, Republicans want to reduce the program’s long-term expenditures.
How, you ask? As noted, they’d implement the Chained CPI, which would result in lower annual COLAs, and thereby reduce the amount of expenditures heading to beneficiaries over the long run.
Republicans are also big proponents of raising the full retirement age, or the age at which you become eligible for your full retirement benefit. Currently, set to peak at age 67 for those born in 2022 or later, Republicans would like to see this gradually increased to as high as age 70. This would require retired workers to either wait longer to receive their full payout, or to accept a steeper monthly reduction if claiming early. Either way, it reduces the lifetime benefits paid out by Social Security, and thereby saves the program money.
Some Republicans, including Donald Trump, have called for a form of means-testing, which would reduce or eliminate Social Security benefit payments for those folks or couples who are wealthy.
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Here’s How The Gop Could Remove $174 A Month From Retirees’ Paychecks Without A Direct Cut
On Capitol Hill, both political parties have acknowledged that Social Security needs some TLC. Unfortunately, neither party is in the same ballpark as to how best to fix what’s estimated to be a $13.9 trillion shortfall over the next 75 years.
What isn’t in doubt, though, is that if Republicans were able to implement their two most prominent solutions, every beneficiary would see some form of reduction in their payout.
The GOP has long favored cost-cutting as the best means of reducing Social Security’s shortfall. The most commonly touted method of tackling this would be by gradually raising the full retirement age — i.e., the age at which you become eligible for 100% of your monthly payout. Currently set to peak at age 67 in 2022 for those born in 1960 or later, Republicans would like to see this figure gradually increased to age 70. Such a move would require future generations of retirees to either wait longer to collect their full payout or to accept a steeper up-front reduction by claiming early. No matter their choice, lifetime benefits, and therefore program outlays, would be reduced.
But the thing about raising the full retirement age is that it takes a long time to work. Meanwhile, the other Republican proposal — changing Social Security’s inflationary tether from the Consumer Price Index for Urban Wage Earners and Clerical Workers to the Chained CPI — could yield modestly faster savings.