Michael Linden on Twitter (@MichaelSLinden) just tweeted the following storm. I don’t have time to do an analysis. Spread the word. We’re all in deep shit.
Oh hey, the GOP Chair of the House subcommittee on Social Security just introduced a new bill to massively cut SS benefits.
I mean massively. Most workers would see their benefits cut by more than 10 percent.
Many would suffer even deeper cuts. For example, benefits to workers making about 50k would shrink by between 11 and 35%! 35 percent!!
Some very low income workers get held harmless, but not all. Worker at $12k who only has 14 years of work history gets cut up to ~50%!!
This is the GOP plan for Social Security. Enormous cuts for nearly all workers. Not a single penny of additional revenue from the rich
Here's the link to the SS Actuaries report on the new GOP plan to cut benefits. www.ssa.gov/...
Just take a gander at Table B2 if you think I'm exaggerating the magnitude and breadth of the proposed Social Security cuts.
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Update: brief summary
The short version is that your benefits are going to be gutted. If you have extremely low income, it won’t be that bad, in most cases. If you earn over the average wage, your benefits by age 90 (when you need it the most) could be cut as much as 75% from the current law.
Retirement age is going up, to 69. Kids receiving benefits have to be enrolled full-time in school. COLA is eliminated for most workers, and severely reduced for everyone else.
I’m pretty sure most currently-retired workers will be spared the worst of it, except for the severe cuts to COLAs. Anyone retiring next year or after that would be in deep shit, and the younger you are now, the worse it will get.
The clear intention is to make Social Security entirely irrelevant.
The historical context is this: Before Reagan, Social Security was always a pay-as-you-go plan; the tax income for a given year went to pay that year's benefits. In the 1970s however, it was realized that when the Baby Boomers started to retire, there would be insufficient numbers of younger workers to pay for the needed benefits. So since Reagan, Social Security taxes (from FICA) have been much higher than needed, in order to build up a surplus. That surplus was invested in US Treasury Bonds, considered the safest investments in the world. The money put into the bonds was (of course) spent (as all money put into bonds always is).
Starting next year, the bonds have to be cashed in to obtain the money to pay benefits. They will be depleted in around 2036. At that time, Social Security will be able to pay about 75% of planned benefits. That means benefits would have to be reduced by about 25%, or we need an additional source of income.
By about the mid 2040s or so, most of the Boomers will have passed away, and Social Security can return to a pay-as-you-go plan.
Currently, FICA tax applies only the the first $118,500 of earned income. (A reader below corrected my original figure. Thank you. $118,500 is the current cap, and it has slowly increased over time.) FICA does not apply to income from interest or dividends or capital gains, and does not apply to income over $118,500. The 2036 shortfall can be eliminated entirely by getting rid of the income cap on FICA taxes, and making all income subject to the FICA tax instead of just the first $118,500. That would allow Social Security to pay all planned benefits forever. In fact, applying FICA tax also to capital gains and other sources of income might allow us to increase benefits, and perhaps lower the retirement age to 60 or even 55.
Rather than do that, Republicans are planing to massively cut benefits. That way, no one in the upper income brackets would have to pay an additional cent to shore up the benefits of the poors.
