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Ryan Budget Fast-Tracks Social Security Cuts

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PAUL RYAN BUDGET PROPOSAL

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.

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