(Chart created by Center on Budget and Policy Priorities.)
Three Republican Senators, Lindsay Graham (SC), Rand Paul (KY) and Mike Lee (UT), have a two-part plan for Social Security that may sound attractive at first glance. But,
pointed out by Daniel Marans, Policy and Legislative Associate at Social Security Works, the proposals are just one more round in the class war that would weaken overall support for Social Security.
The plan would raise the retirement age gradually from 67 to 70 for Americans now under 56. And it would means-test Social Security.
[Raising the retirement age] is a big, across-the-board benefit cut, regardless of whether you claim benefits at 62 or 70. Raising the retirement age two years, from 67 to 69, amounts to a 13% cut in benefits, according to the SSA. (Graham, Paul and Lee And keep in mind the full retirement age is still in the process of going up to 67 from changes made in the 80s. How many people even know that the full retirement age is 67, not 65, for people born after 1960?
But not only is raising the retirement age a major benefit cut, it is also an extremely regressive cut that discriminates against low-income and minority workers, and the elderly unemployed. You see, workers in the lower half of the earnings distribution have seen few gains in life expectancy at age 65 in recent decades. Life expectancy at age 65 for women in the lower half has actually gone down. Older low- income and minority workers are also much more likely to work in physically demanding professions or suffer from health problems that prevent them from retiring later.
Finally, because of age discrimination and the tight labor market, the elderly unemployed have tremendous difficulty finding work once laid off. And unemployment among workers aged 55 or older is at a record-high.
The problems of later retirement are easy to grasp. This frontal assault on low-income workers, particularly those in body-wearying jobs, is clear. But means testing sounds like a good idea at first glance—why should the wealthy get Social Security checks they don't need? However, means-testing would generate very little savings for the program. More important, it would have a pernicious side-effect, as explained here:
Means testing will greatly undermine public support for Social Security by changing it from a universal insurance system to a government welfare program.
• Social Security provides larger benefits to workers who earn and contribute more. With a means test, those who earn and contribute the most would receive nothing, thus destroying the link between earnings and benefits that has sustained the program for 75 years.
• Under an insurance program, policyholders are entitled to benefits irrespective of their wealth. Similarly, workers who pay for Social Security’s life insurance, disability insurance and old age annuity protections should receive their benefits as a matter of right, as they always have.
So while means-testing would not save much money, it would break the link of "we all get something out of it" and give the right more ammunittion to bolster their attacks on Social Security as a welfare program.
If Graham, Paul and Lee really wanted to solve Social Security's long-term actuarial problems—which won't kick in for many, many years—there's a well-known solution: Raise the cap on earnings subject to Social Security taxes. Eliminating the cap would, by itself, almost completely close the gap between revenue and expenditures that will eventually put Social Security out of balance. But then putting the system into balance by taxing those who can afford it rather than imposing changes that will hurt those most in need is not what these three and other right-wingers have in mind.