Ryan Budget Fast-Tracks Social Security Cuts

There's been so much noise about what Paul Ryan's budget plan does to Medicare and Medicaid that the damage it would do to Social Security has gone unnoticed.

It is true that Ryan sidesteps proposing specific cuts in Social Security benefits. (For some insight into where Ryan's heart lies, however, we have his privatization scheme in his 2010 Roadmap for America's Future, aka the Highway to Hell.)

But Ryan's budget strikes two major blows to Social Security:

It creates an unprecedented new fast-track procedure to ram through Social Security benefit cuts.

• Under Ryan's plan, any year Social Security is not in 75-year balance, the president and Congress would have to legislate changes that bring it to solvency through an "expedited process."


• In effect, Ryan would free up Social Security for fast-track cuts by turning it into a regular line budget item. Since Social Security is not part of the general budget, has its own revenue stream, and is forbidden by law from borrowing, it has always been dealt with separately from the rest of the budget. In fact, Ryan had to create a new fast-track process to trigger cuts for Social Security alone, because by law, it is excluded from fast-track reconciliation procedures for the general budget.


• Further, projections of Social Security's solvency change every year, which means that Ryan's plan could force big changes to Social Security based on very short-term variations in the program's finances.

It endorses major middle class benefit cuts.

• Just what kinds of changes would Ryan push through under the new "expedited process" he is proposing? Well, short of explicitly embracing their recommendations, Ryan makes clear that the draconian plan put forward by Fiscal Commission Co-Chairs Erskine Bowles and Alan Simpson is his model for reform. Click here and here for a refresher on the Bowles-Simpson proposal.

The Bowles-Simpson proposal was two-thirds benefit cuts and one-third revenue increases. Only, Ryan thinks the "merits" of their paltry revenue increases are "debatable." He'll take the gargantuan benefit cuts and leave the additional revenue, thank you very much.

Here's a brief summary of the Bowles-Simpson cuts:

• Cut benefits for 60% of "Very Low" earners, those with average annual earnings of $10,771


• Raise the full retirement age to 69, and the earliest eligibility age to 64 (13% cut)


• Cut the cost of living allowance by adopting the Chained CPI, cutting $108 billion in benefits over 10 years


• Flatten the benefit formula, dramatically reducing Social Security's wage replacement rate for all but the poorest workers, thus eroding the link between earnings and benefits, and turning Social Security into a welfare-style program

In addition, Ryan's plan would "pare back spending on non-security government bureaucracies to below 2008 levels and hold this category of spending to a five-year freeze." It would be up to the Appropriations Committee to decide which specific government programs get cut under this spending freeze, which means the Social Security Administration's administrative funding would be in the hands of the Republican Appropriations Committee. If the $1.7 billion in administrative funding cuts in the House Republicans' Continuing Resolution, HR 1, is any guide, however, the Appropriations Committee will not tread lightly on Social Security's administrative funding. To give an idea of the effects cuts to SSA's administrative funding could have, the $1.7 billion in cuts in the HR 1 would have shuttered SSA offices for four weeks, causing them furlough thousands of workers and preventing the processing of 700,000 new claims.

 

Comments

[rjr1]

02:10 PM on 04/23/2011

This page helps in making sense of the following: Recently congress very curiously decided to cut ss payrole taxes just when there is a shortfall of incoming dollars. I find this to be devious to say the least. Did they (congress and Obama) want to "stimulate" the economy (hah! hah!) or create the appearance of greater problems with ss to justify slashing (reforming) it more?
The hand picked deficit commission (Obama), the gang of six, Ryan, and congress are following a carefully arranged script meant to brainwash the public into thinking that the only choice is slashing entitlements or risk a "government shutdown". Did any of them threaten a shutdown when they passed the extension to the ruinous Bush tax cuts for the filthy rich? Hmmmm?
Do not be fooled! They are only interested in looking in our direction when discussing neccessary "sacrifices". Are the democrats and republicans really foes or in many cases just co-conspirators?

[SisterAnn]

10:49 AM on 04/30/2011

They also wanted to be able to say the government paid some of Social Security.

It seems Obama tried doing it the democratic way with a republican administration that he appointed. Then for about a year it looked like he joined forces with the Republicans. The past month or so, he seems to remember he is a Democrat.

He is a Chameleon, (pronounced ca million) changing to match his environment.

[Matthew Schilling]

01:32 PM on 04/11/2011

If a conversation is going to take place about how to reform Social Security, I suggest the following for discussion: SS has ALWAYS been billed as a key component of the Safety Net - it was designed and touted as a way to keep poor senior citizens from shivering in cold, dark apartments eating cat food.
It was never described as a 2nd, 3rd, or 4th pension check for the well-to-do.
So, I recommend means testing for SS for anyone who has received back all their contributions, plus some reasonable accrued interest.
If and when a retiree has received SS benefits equal to what they would've gotten by putting all their contributions into a savings account that earned, say, 3% APR, receiving any further benefits would depend on whether they actually needed it, or not.
Water doesn't flow uphill; workers of modest means should not see a portion of their hard-earned paycheck taken from them and handed to wealthy retirees.
The personal wealth of mature Americans ranges from super rich to dirt poor. Therefore, age and work history alone cannot be the only criteria on which to base SS, though getting back what is paid in plus some interest seems only fair.
I have no idea how many people today would be affected by my idea, or how much my proposal might save over the next decade or two. But I have a hunch it would help a lot - and return SS back to its roots.

[SisterAnn]

10:58 AM on 04/30/2011

Since the higher paid earner draw more benefits and live longer then they should pay in more payroll taxes. Raising the wage cap would work because we are already paying on the first $106,800 in wages. If the wage cap is raised, then only those who earn over $106,800 would pay more payroll taxes. We need to get more of that CEO money paid into Social Security...you know ....those million dollar bonus checks.

Means testing would not be fair. Many have spent every penny they earned while others are savers. It could mean the spenders would get Social Security and the savers would not.

It may be they could base it on a high income, like one million $ earner won't qualify for Social Security, but would that be while working or after retirement? See how fast it gets complicated?

[jay111]

11:38 AM on 04/11/2011

Congress very curiously just decided to cut ss payrole taxes just when there is a shortfall of incoming dollars . I find this to be very devious to say the least. This was not done to "stimulate" the economy but to create a greater problem with social security and ties into the new proposals by Ryan to drastically cut ss to balance the books.

[jay111]

11:29 AM on 04/11/2011

Again the parties have conspired thru a manufactured "emergency", the threat of a government shutdown to screw the middle class and escape individual responsibility and blame. Have we not seen this scenerio before (bank bailout giveaways, trillion dollar democratic pork spending bill to "stimulate" jobs etc..). Congress easily passed an extension to the ruinous Bush tax cuts for the filthy rich which the republicans are anxious to make permanent and not one of them threatened a "government shutdown". Hmmmm?

[jay111]

11:23 AM on 04/11/2011

The social security program amounts to a compulsory savings program of OUR money for OUR retirement from OUR paychecks. Instead of keeping these funds safeguarded, collecting interest our representatives put it all in the general fund and spent it (they stole it all). Now that there is more money going out to retirees and less money coming in because of the economy (less jobs, less ss payrole tax money) this government ponzi scheme is starting to collapse faster than a Madoff scam and that is why our politicians want to slash (reform) ss because now they will have to find the funds elsewhere and pay interest on that debt. GET IT?

[SisterAnn]

10:18 AM on 04/08/2011

We were led to believe that Social Security would not have any changes to it at this time.

You can't trust Ryan and the conservatives as far as you can throw them, which isn't too far.

Ryan is loving this, he loves the pictures of himself.

He needs to be recalled.

[allenwsmith]

07:27 PM on 04/07/2011

Social Security has only one short-term and one long-term problem. Fix those problems, and leave Social Security alone. The short-term problem is that although Social Security supposedly has a $2.6 trillion surplus which would be enough to pay full benefits until 2037, that money has already been spent by the government on other programs, and the government has made no provisions for repaying the money. Provisions must be made for repayment.

If the short-term problem is fixed, Social Security would be able to pay full benefits until 2037. A simple fix could extend that date by decades. Currently payroll taxes are paid only on incomes up to $106,800. All income above that cutoff point is exempt. By removing the cap so that everyone would pay payroll taxes on all of their income, Social Security could pay full benefits for decades beyond 2037. Let's fix the simple problems and otherwise leave the program alone.
Allen W. Smith, Ph.D. www.thebiglie.net

[tompoe]

06:53 PM on 04/07/2011

House passes make-believe, lying, corrupt budget proposal. Senate ignores it. GOP now can go the full distance, never once addressing jobs, jobs, jobs. More interesting, they will never, ever point to even one job created by their extension of the tax cuts for the wealthy that increased our deficit by over $900 billion.