Alicia H. Munnell -
Why in the world would Republicans put out a plan to dramatically cut Social Security?
Related video: Here’s How Much Social Security’s Buying Power Has Plunged
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Even Donald Trump said he wouldn’t mess with the program’s benefits. Yet, the Republican Study Committee’s Blueprint to Save America, released in June, has a full section devoted to Social Security. I had never heard of the Republican Study Committee (RSC), but apparently the organization has served as the conservative caucus of House Republicans since its founding in 1973, and it currently consists of 158 of the 212 Republican House members.
Read: Yes, some Republican senators really are talking openly about Social Security cuts
If the Republicans take over the House, Rep. Kevin McCarthy has not ruled out cutting Social Security. So, it’s worth taking a look at what a Republican plan might look like.
The proposal in the RSC document — Make Social Security Solvent Again — is based on a bill put forward in 2016 by Sam Johnson (R-Texas). That legislation would eliminate Social Security’s 75-year deficit solely by cutting benefits. According to scoring by the Social Security actuaries at the time, the Johnson plan would reduce Social Security costs at the end of the 75-year projection period by 31%.
This 31% cut is the result of three major changes:
Raising the Full Retirement Age—currently 67—to 69
Dramatically reducing benefits for above-average earners
Eliminating the cost-of-living adjustment (COLA) for individuals with income in excess of $85,000 ($170,000 for married couples) and using a chain-weighted inflation index for those below
Although the RSC takes a slightly different approach to raising the Full Retirement Age — linking it to increases in life expectancy — one would expect the overall impact on future workers to be roughly the same.
Read: Social Security COLA 2023 benefits are rising 8.7%—here’s what that means for recipients
The best way to gauge the impact of these three changes is to examine the ratio of proposed to current benefits at different points in the earnings scale. Because the impact of eliminating the COLA increases over the retirement span, it is helpful to look at individuals at age 85. As Figure 2 below indicates, low earners are basically held harmless, while medium-earner benefits are cut to 77% of those provided under current law, higher earners to 40%, and maximum earners to 34%.
At first glance, one might conclude that’s a fine outcome: cut the benefits of the well paid and preserve the benefits of the low paid. But look closely at the earnings associated with the categories of well paid. The medium worker, who sees benefits drop to 77% of current law, had career average earnings of $58,700 in 2021 and the “high” earner, who sees benefits drop to 40% of current law, earned $94,000.
These are not rich people.
Read: Social Security’s COLA is no bonus
Moreover, changes to Social Security need to be made in the context of the entire retirement income system. Many households are likely to retire with little other than Social Security benefits, since at any moment in time less than half the private sector workforce participates in an employer-sponsored retirement plan. And among those lucky enough to have a 401(k) plan, balances are modest. The 2019 Survey of Consumer Finances, the latest comprehensive data available, shows that median 401(k)/IRA holdings of working households with a 401(k) approaching retirement (ages 55-64) were $144,000.
Policy makers do need to address Social Security’s long-run deficit, but the fact that a majority of House Republicans may support a plan that cuts Social Security by a third should terrify voters. Why put out such a document?
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Rick Scott claims he doesn't 'know one Republican who wants to change' Social Security after Ron Johnson floated proposals to put the program's spending in flux
Katie Balevic
Sun, November 6, 2022
NRSC chairman Sen. Rick Scott, R-Fla., introduces Senate candidate Herschel Walker at his campaign rally in Athens, Ga., on Saturday, November 5, 2022.Bill Clark/CQ-Roll Call, Inc via Getty Images
Sen. Rick Scott said he doesn't know any Republicans who want to change Social Security or Medicare.
Some Republicans have suggested placing the two programs in the discretionary spending budget.
They have also suggested raising the age to collect Social Security and raising health insurance premiums for seniors.
Sen. Rick Scott said he doesn't "know one Republican who wants to change" Social Security and Medicare after his colleagues floated placing the two programs in the discretionary spending budget.
Democrats have honed in on the line about Social Security spending, using it to campaign against Republicans. On NBC News' "Meet the Press" on Sunday, host Chuck Todd asked Scott about his position on Social Security.
"Sunsetting the program every five years for renewal, why do that? Why put Social Security into the political arena every five years? Why put seniors through that?" Todd asked.
"I have no interest in changing the Medicare program. I want to make sure we preserve the benefits of Medicare and Social Security. I don't know one Republican who wants to change that," Scott, from Florida, replied, adding that both programs are "going bankrupt."
In August, Sen. Ron Johnson of Wisconsin suggested that Social Security and Medicare should be discretionary spending programs that are approved by Congress instead of federal entitlement programs (or mandatory spending), according to The Washington Post. A spokesperson from Johnson's office later told the Post that Johnson doesn't want to eliminate the programs but thinks they are "threatened" without the "fiscal discipline and oversight typically found with discretionary spending."
Top Republicans also suggested raising the age to collect Social Security from 67 to 70 years old and raising health insurance premiums for seniors, pitching the ideas as a way to combat high government spending, according to The New York Times.
Both President Joe Biden and former President Barack Obama, among other top Democrats, have called out Republicans on the campaign trail for the suggested cuts and changes.
Rick Scott claims he doesn't 'know one Republican who wants to change' Social Security after Ron Johnson floated proposals to put the program's spending in flux
Katie Balevic
Sun, November 6, 2022
NRSC chairman Sen. Rick Scott, R-Fla., introduces Senate candidate Herschel Walker at his campaign rally in Athens, Ga., on Saturday, November 5, 2022.Bill Clark/CQ-Roll Call, Inc via Getty Images
Sen. Rick Scott said he doesn't know any Republicans who want to change Social Security or Medicare.
Some Republicans have suggested placing the two programs in the discretionary spending budget.
They have also suggested raising the age to collect Social Security and raising health insurance premiums for seniors.
Sen. Rick Scott said he doesn't "know one Republican who wants to change" Social Security and Medicare after his colleagues floated placing the two programs in the discretionary spending budget.
Democrats have honed in on the line about Social Security spending, using it to campaign against Republicans. On NBC News' "Meet the Press" on Sunday, host Chuck Todd asked Scott about his position on Social Security.
"Sunsetting the program every five years for renewal, why do that? Why put Social Security into the political arena every five years? Why put seniors through that?" Todd asked.
"I have no interest in changing the Medicare program. I want to make sure we preserve the benefits of Medicare and Social Security. I don't know one Republican who wants to change that," Scott, from Florida, replied, adding that both programs are "going bankrupt."
In August, Sen. Ron Johnson of Wisconsin suggested that Social Security and Medicare should be discretionary spending programs that are approved by Congress instead of federal entitlement programs (or mandatory spending), according to The Washington Post. A spokesperson from Johnson's office later told the Post that Johnson doesn't want to eliminate the programs but thinks they are "threatened" without the "fiscal discipline and oversight typically found with discretionary spending."
Top Republicans also suggested raising the age to collect Social Security from 67 to 70 years old and raising health insurance premiums for seniors, pitching the ideas as a way to combat high government spending, according to The New York Times.
Both President Joe Biden and former President Barack Obama, among other top Democrats, have called out Republicans on the campaign trail for the suggested cuts and changes.
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