A group of Republican lawmakers has a proposal that would slash Social Security benefits for virtually everyone.
The plan, headed by House Ways and Means Social Security Subcommittee Chairman Sam Johnson and introduced on December 8, would destroy the basic structure of Social Security.
Social Security, a federal insurance system that offers financial assistance to people who are retired or unable to work, currently faces a challenging future. Funds are projected to start running out over the next 20 years, which means citizens could face across-the-board taxes to cover the costs if no other reforms are agreed upon in Congress.
The GOP Plan to Annihilate Social Security
Johnson’s Social Security Reform Act of 2016 proposes to eliminate the funding gap by implementing huge benefit reductions while at the same time giving tax cuts to affluent retirees. The Social Security Office of the Actuary estimates that this plan would cut $2 trillion from the fund, without asking for any taxes to help bolster the program.
With fewer dollars available, the plan would reduce the amount paid out in cost of living expenses and raise the retirement age to 69, thus decreasing payouts by $13.9 trillion.
For retirees with average lifetime earnings of $22,000 to 49,000, benefits would decrease by 28 percent.
Since the program is already not keeping up with rising prices, seniors have been asking Congress to approve higher cost of living increases; Johnson’s plan goes in the opposite direction, reducing cost of living benefits even further.
To put this in perspective: Currently, the system’s 39 million retired workers draw average benefits of less than $16,000 per year, hardly enough for a dignified retirement. But under the GOP plan, even that would be cut by about a third.
“They’ve changed it from a social insurance program which returns 99 cents on every dollar in the form of benefits, into this very weird regressive tax structure that hits the middle class the hardest and does not return the money in the form of benefits,” explains Social Security Works’ Alex Lawson to ThinkProgress. “It’s a symphonically destructive thing.”
Another Approach to Social Security
How exactly is Social Security funded? Currently, employers and employees each pay 6.2 percent of wages, and the self-employed pay 12.4 percent, up to a maximum of $118,500 (for 2016).
Under this approach, hundreds of thousands of Americans stop paying into Social Security after the first month of the year when they reach the maximum taxable amount. As ThinkProgress points out:
By the time Donald Trump is sworn in as president, tens of thousands of Americans will already have stopped paying into Social Security for the entire year.
Those lucky few earn at least $2.1 million a year — a level roughly 100,000 tax filers reached in 2014, according to the IRS. They owe their yearlong retirement tax holiday to a rule capping the amount of annual income that is subject to payroll taxes. With wealth inequality’s explosion over the last four decades, a huge portion of the money generated by workers’ sweat is now escaping the retirement system.
Many progressives would prefer to fix the funding gap by raising or eliminating this cap, requiring wealthier Americans to assume a much larger share of the program’s cost. Eliminating the cap would make Social Security fiscally secure for about another 75 years, according to one analysis.
The GOP Lie: “Saving Social Security”
As if the GOP plan were not bad enough, in an official press release, Johnson has the nerve to outright lie. “Sam Johnson Unveils Plan to Permanently Save Social Security” reads the headline.
“Today, Ways and Means Social Security Subcommittee Chairman Sam Johnson (TX-03) introduced legislation that will permanently save Social Security, ensuring this vital program continues to work for today’s workers and beneficiaries and future generations.”
According to Johnson, his plan will keep Social Security solvent for 75 years. Whether the middle-class and the poor could survive that long with the proposed cuts would remain to be seen.
Trump’s Pledge Not to Cut Social Security Benefits
Trump explicitly said that he would not cut Social Security benefits if elected. “I’m not going to cut it, and I’m not going to raise ages, and I’m not going to do all of the things that they want to do. But they want to really cut it, and they want to cut it very substantially, the Republicans, and I’m not going to do that,” he told a Wisconsin radio station during the primary.
The $2 trillion question: Will he keep his word and stand up to his fellow Republican lawmakers?