Who Wants to "Cut" Social Security?
Who Wants to "Cut" Social Security?
Every two years, like clockwork, Democrats trot out the old canard that Republicans want to cut Social Security. But guess who's leading us to an immediate 21% across the board cut in a few years?
In every election I’ve been involved with, going back 44 years, Democratic candidates for the US House and Senate, and a couple of presidents, claim that Republicans plan to cut Social Security.
You don’t have to go far to find the most recent evidence: The White House’s official government website.
“…the Republican Study Committee, which represents a majority of House Republicans, has proposed a specific plan to cut Medicare and Social Security benefits, including through privatization and raising the eligibility age.”
Your tax dollars at work. And it is a lie.
Writing for the Washington Examiner, James Antle provides a brief outline of how Democrats have used Social Security to score political points since I was born (Social Security was established during the Great Depression of the 1930s). And not just attacking the GOP for wanting to cut it - benefits have been expanded, including disability payments. In the beginning, 14 workers paid into the system for every beneficiary. Today, that ratio is approaching an unsustainable 2:1.
Democrats toppled the first Republican Senate majority since the 1950s by running against a freeze in Social Security cost-of-living adjustments.
Under former President Bill Clinton in 1995, Democrats got back into the game against new GOP congressional majorities by railing against their budget reducing the rate of growth in Medicare spending. Spending fights led to government shutdowns. Clinton successfully ran for reelection the following year promising to protect Social Security, Medicare, and Medicaid from Republicans on Capitol Hill.
Democrats rebuffed a Social Security reform plan by freshly reelected President George W. Bush in 2005, which came during a 10-seat GOP Senate majority. Bush said he had earned political capital and intended to spend it. The proposal wasn’t the most important reason Republicans lost control of Congress the following year, but it was a Democratic talking point nevertheless.
The budget blueprint pushed by eventual House Speaker Paul Ryan (R-WI) sought to revamp Medicare. It became a major feature of Democratic campaigns, with ads portraying Ryan pushing wheelchair-bound grandmothers off a cliff.
Some partisans were so blatant in their attack that even Twitter’s fact-checkers (!!) called them out on a fabricated graphic.
Getting nearly 2,900 retweets for an account with less than 500 followers is quite an accomplishment. Congratulations, Mr. Capanzzi. You had help.
“A fabricated graphic is circulating online purporting to show policy points published by House Republicans,” Twitter posted on October 25th. “The contents of the graphic do not match the party's policies and goals outlined in the Commitment to America plan released in September, which aims to support the nation’s energy industry, fight crime and combat illegal immigration ahead of the upcoming elections, according to the Associated Press.”
Here’s what Associated Press reported, also not known for fact-checks that remotely support or defend Republicans:
CLAIM: An image shows the House Republicans’ “Commitment to America” plan, including raising the eligibility age for Medicare from 65 to 75 and making retirees with pensions, 401(k)s or disabled veterans’ benefits ineligible for Social Security payments.
AP’S ASSESSMENT: False. The image shows policies that don’t match the language in House Republicans’ actual plan. While Republicans lawmakers have suggested raising the age for Medicare, the Commitment to America does not give a specific age, and there is no evidence of lawmakers proposing other policies as worded in the graphic.
THE FACTS: With the midterm elections just weeks away, social media users are sharing a misleading graphic claiming to outline House Republicans’ policy plan.
The image shows a logo reading “Commitment to America” that matches branding on House Minority Leader Kevin McCarthy’s website for the House GOP’s 2022 agenda. “Entitlements are bankrupting our country and the future of our children,” reads the image. “Republicans are the only Party with a plan to address our fiscal crisis and commit to the following if you give us the majority in November.”
Other media outlets followed suit. Interestingly, media coverage of the election has suddenly seemed to become more balanced in the past several days, even though many also seem to have stopped reporting public polls. But that’s still not stopping the usual blue bubble media suspects from propounding their scare tactics.
US Senator Patty Murray (D-WA), 72, a 30-year incumbent facing her toughest reelection against GOP challenger Tiffany Smiley, earned four “Pinocchios” from even the Washington Post’s Glenn Kessler for her false claim that “Republicans plan to end Social Security and Medicare if they take back the Senate.” Kessler rarely doles out four Pinocchios to Democrats. That designation makes you out to be a liar.
“This is yet another example in which Democrats strain to conjure up a nonexistent GOP plan regarding Social Security and Medicare,” Kessler said.
So, what are the facts? Let’s look at what the House GOP “Commitment to America” says about entitlement programs (including Social Security and Medicare) and then understand what is going on with the financial integrity of the system, courtesy of a friend and former Senate staff colleague, Dr. Charles Blahous, a former Social Security and Medicare Trustee. Blahous has warned about Social Security and Medicare’s impending financial challenges for almost two decades. We’ll also consult the most recent Social Security and Medicare trustees’ report (2022).
Here’s what the House GOP Commitment to America says about entitlement programs:
To help save entitlement programs and honestly account for spending in the long term, Republicans will reform how the CBO evaluates changes to them to consider impacts beyond the 10-year window, including on the solvency and soundness of entitlement trust funds. This will include accounting for the compounding of savings over time and the real cost of carrying debt or delaying spending or taxes. Congress must be prepared to make reforms to extend the solvency of the entitlement programs. Finally, Republicans will also return to enforcing budgetary rules that prevent new increases in mandatory spending without accounting for spending cuts to prevent adding new debt.
Oooh! Oooh! Cue the spooky music! Some GOP House members have commented on the need to reform Social Security and Medicare, but nothing remotely as draconian as Democrats claim. GOP members are at least one step ahead of Democrats, vague as they are, on the need to save the program from insolvency - they acknowledge the problem and want to address it.
At the risk of oversimplification, Social Security tax revenues go into a “trust fund” (Old Age Survivors and Disability Insurance, OASDI). While those revenues are accounted for, the federal government borrows from the trust funds to pay other obligations (deficit spending). The trust fund is left with a bunch of IOUs.
Social Security pays benefits to about 50 million retirees, plus 15 million additional beneficiaries, including disabled Americans.
When the trust fund balances are exhausted, short of reforms to address the imbalances, payments will immediately be reduced, so outflow and income are in balance. Some project that without congressional action, Social Security recipients could see their benefits immediately reduced by 21 percent, if not more. As for Medicare, it may see their reimbursement rates to doctors and hospitals drop immediately by about 10 percent. Some may refuse to accept new Medicare patients. Some already are.
According to this year’s trustee’s report, “Social Security’s total cost is projected to be higher than its total income in 2022 and all later years. Total cost began to be higher than total income in 2021. Social Security’s cost has exceeded its non-interest income since 2010.” As for Medicare, while more complicated, it is worse.
The OASDI trust fund may reach insolvency by 2034. Medicare is scheduled to “go bankrupt” by 2028, a little more than five years away. Blahous, from 2018:
For years, the annual reports of Social Security’s trustees have told the same somber story: the benefits Social Security is promising far exceed what its income can fund. Without prompt action to balance system finances, Social Security will become insolvent and no longer able to maintain its benefit schedules. Year after year the trustees have presented this essential information and called for corrective legislation, while the program’s structural shortfall grew. By the time of this year’s report, the present value of scheduled benefits in excess of taxes for everyone participating in the program to date had climbed to more than $32 trillion.
Despite these intensifying annual warnings, lawmakers have not acted. One reason they have not is the presence of an accounting phenomenon known as the Social Security trust funds. The assets held by these combined trust funds appear massive ($2.9 trillion in the latest report) while the projected date of their depletion seems to be distant (2034). The apparent remoteness of doomsday has signaled, to the uninformed, that there is still plenty of time for elected officials to fix the problem before it becomes an urgent crisis. This is very wrong. The crisis is now.
Policymakers may believe they have five years to fix Medicare and 12 to fix Social Security, so what’s the hurry? After all, didn’t the last major Social Security rescue bill, from 1983, wait until the last minute? Blahous addressed that, too, in 2018:
Closing Social Security’s shortfall over the next 75 years (far less than a permanent fix) would require savings equal to 17 percent of its scheduled expenditures if enacted today. Obviously, lawmakers have never and will never indiscriminately cut benefits 17 percent across the board, which would hit today’s poor 90-year-old widow as hard as someone who won’t retire for 40 years. Assuming instead that lawmakers only change benefits for those yet to retire, the size of the required cuts rises to 21%. But again, that severely understates the adjustments required, for we are not about to cut benefits 21% for everyone, rich and poor, who retires next year. Changes would undoubtedly be phased in more gradually, and thus would need to hit future retirees far harder.
If this doesn’t sound difficult enough, consider what happens if we wait until 2034, the projected depletion date for the combined Social Security trust funds. By that point, even total elimination of all benefits for the newly-retiring would be insufficient to maintain solvency. For all practical intents and purposes, the shortfall by then will have grown too large to correct. (emphasis added)
As long as Democrats continue to demagogue Social Security, the problem will only worsen. Donald Trump was wrong to suggest in 2016 that he would not touch Social Security and was critical of Republicans who expressed the need for reforms, at least regarding their election prospects. Democrats are no less wrong to politicize it and make an urgent problem more severe.
Another reason the attacks may not work is that senior citizens and retirees (like me!) are cognizant of the fiscal challenges to the system. I’ve not seen recent polling but speaking as just one senior, I’m all in on a fix, sooner than later, that trims the annual inflation adjustments, slowly raises the retirement age to 70 or higher for workers under 50, and - an idea I don’t like - more quickly adjust (raise) the annual cap on income for Social Security taxes, which currently stands at about $147,000. Democrats are all about “taxing the rich,” which will be their political demand. You'll learn other tax gimmicks as we get closer to a real crisis. None of this involves a “cut” in benefits (other than waiting longer to collect them), but benefit expansion and increases should be off the table. Saving what we have will be challenging enough.
Why have an income cap at all, some may ask? It is because Social Security was designed as an income transfer program - taking only from workers what is needed to cover retiree benefits. Eliminating the cap turns Social Security into a welfare program. Complicating this is that employers have eliminated pensions in favor of matching 401(k) retirement program contributions. They pale compared to corporate pensions, but that’s another crisis Congress hasn’t dealt with.
When Social Security first started, the full retirement age was 65. Life expectancy in the mid-1930s was about 64. Today, life expectancy is near 80 years, far higher than 67 years for most people retiring in a few years (born in 1956, mine is 66 years and four months, thanks to the 1983 reform).
Everyone would have skin in the game - seniors would agree to take slightly smaller increases based on actual inflation rates versus the current “wage index.” Workers would have 20 years to adjust to an increase in the age for full Social Security retirement. And wealthier individuals would pay a little more through a higher income cap (not higher rates) to reflect the actual benefits costs relative to life expectancy. When you combine Social Security and Medicare, you will likely receive more benefits than you paid.
My friend Chuck Blahous might argue that more is needed. But to make it as palatable as possible, we must act now. We should have acted years ago. We lack leadership.
If anyone is proposing anything approximating a severe cut in Social Security retirement and disability payments, it is Democrats like Joe Biden and Patty Murray. I doubt any meaningful, effective solution is possible while both are in office, among other self-serving politicians. We need bipartisan “cover” for an effective solution, just as we had in 1983 when President Ronald Reagan teamed up with Democratic House Speaker Tip O’Neill. Senate GOP Majority Leader Bob Dole (KS) and Democratic US Senator Daniel Patrick Moynihan (NY) played key roles. We lack statesmen like them, sadly. Maybe some will step up. The time is now.
We are in desperate need of serious people in both parties. Kudos to House Republicans for at least acknowledging the issue. Where are serious Democrats? Much work lies ahead. Politicizing it makes the problem worse.
Tip O’Neill, call your office.