The newly introduced proposal from House Republicans to "save" Social Security is exactly what you'd expect: "saving" Social Security by destroying its promise of guaranteed benefits. Rep. Sam Johnson's (R-TX), the powerful Chairman of the Social Security Subcommittee of the House Ways and Means Committee unveiled his plan last week, basically daring Presidential-popular-vote-loser-elect Donald Trump to renege on his campaign promise to protect the program. But because Johnson says it's a "plan to permanently save Social Security," a willfully uninformed Trump will probably go along with it. That, and the fact that it gives a tax cut to the rich.
Typically, Social Security “reform” proposals at least pay lip service to the fact that the payroll tax has been giving the wealthy a larger and larger pass, by covering an ever-shrinking percentage of their wages and exempting the capital gains and dividends that make up a larger share of high-end income.
Johnson’s plan doesn’t mention that at all. It does, however, give higher-income beneficiaries a tax cut by eliminating income tax on benefits starting in 2045. The tax affects about 30% of retirees by treating at least half of the benefits of those earning more than $32,000 as taxable income.
By law, the tax must be credited to the Social Security system. It’s scheduled to bring in as much as $78 billion in 2025. Johnson’s rationale here is murky. If Social Security is in such bad shape that he sees the need to slash benefits, why cut its revenue, too?
Oh, I know, know! So that he can argue benefits have to be cut! And cut they are, and not just for future retirees. It actually would increase benefits for the lowest-income workers, those who made an annual average of about $22,105 over their lifetimes. That's great, but for everybody else? Kevin Drum puts in a graph.
Yep, cuts from 28 percent to 43 percent! What's going on here is an old ploy—turning Social Security into welfare, undermining its popularity by making it a program for just the lowest-income, and making it easier to entirely kill off eventually. But that's not all—unlike most of the plans Republicans have come up with in recent years to destroy Medicare and Social Security, this doesn't start a decade from now, it starts immediately with cost-of-living cuts beginning in 2018. Oh, and for people with incomes averaging $85,000 or more, COLAs are totally eliminated. In less than two years.
That was a very dumb tactical error on Johnson's part, one that Democrats will have more than enough allies to exploit. And they're ready. Here's Nancy Pelosi: "Apparently nothing upsets House Republicans like the idea of hard-working people getting to enjoy a secure and dignified retirement. While Speaker Ryan sharpens his knives for Medicare, Chairman Johnson’s bill is an alarming sign that Republicans are greedily eying devastating cuts to Americans’ Social Security benefits as well. […] Slashing Social Security and ending Medicare are absolutely not what the American people voted for in November. Democrats will not stand by while Republicans dismantle the promise of a healthy and dignified retirement for working people in America."