America’s seniors, people with disabilities and their families who depend on Social Security have legitimate reason to be scared whenever Congress starts cutting backdoor deals because they know from experience that Social Security, Medicare and Medicaid have been used as piggy banks or political hostages by GOP leaders always looking for ways to cut benefits.   

The good news is, contrary to claims by largely financial writers, Social Security benefits were not cut in this week’s Congressional Budget deal.   

We take on one of the seriously flawed stories in NCPSSM’s “Equal Time”:  

 “Proposed budget bill would have devastating effects on millions’ Social Security benefits”, Laurence Kotlikoff, PBS Columnist 

“...the new budget ​drastically cuts Social Security benefits for many of those now collecting, drastically cuts benefits for many of those who were about to collect, exacerbates Social Security work disincentive and induces households to do exactly the wrong thing, namely take their benefits too early at the cost of permanently lower benefits.”

In a column loaded with scary and inflammatory rhetoric describing Congress’ budget deal as  “devastating,” “radical,” and “truly draconian,” Laurence Kotlikoff does his readers and especially Social Security beneficiaries a huge disservice by presenting changes that impact a tiny percentage of Americans as something much larger.  At issue is a little-used benefit strategy called File and Suspend.  The Budget deal modifies this practice and fixes the unintended consequences (the Social Security Actuary calls it a loophole) in a 2000 Social Security law that allows retirees to file for Social Security and then suspend receipt of their benefits to maximize their Social Security payout. Under the Budget deal, the tiny percentage of beneficiaries (estimated to be about 100,000 people) who’ve used this strategy will be allowed to continue to do so.  Their benefits will not be cut.  However, Congress is changing this claiming practice for the future.  Spouses, divorced spouses, the disabled and children will still quality for their regular earned Social Security benefits much as they have in the past. As the co-author of a how-to book advising people on ways to use “aggressive claiming strategies,” there’s no surprise Kotlikoff finds this provision frustrating; however, these changes are far from “reneging” on Social Security’s promise as claimed in his piece. 

The National Committee does not support the Congressional majority’s continuing use of Social Security as a bargaining chip in budget negotiations.  However, it’s vital that Americans receive the full story about Congressional action on Social Security, including who is truly affected and in what ways.  The Congressional budget deal does not cut benefits and will not harm millions of people, contrary to what was reported by PBS.  

The Economic Policy Institute also provides this description of the file and suspend change:

“Eliminating “aggressive Social Security-claiming strategies, which allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits” was something the president included in his fiscal-year 2015 budget, not something the administration reluctantly agreed to. And most advocates, including the Social Security Works coalition, to which EPI belongs, think it’s a loophole that needs to be closed, since the purpose of the delayed retirement credit is to equalize lifetime benefits, not to give savvier beneficiaries who can afford to delay take-up a little something extra. The dissidents counter that a benefit cut by any other name is still a benefit cut, and say it’s a strategy that can help divorced women, who can be particularly vulnerable in retirement.

 The dissidents make a strong case with feminist appeal. But it’s still double dipping even if a few people who take advantage actually need a larger benefit. In the end, it all seems a distraction from the benefits of the agreement, which include averting large benefit cuts to disabled beneficiaries.”

The budget agreement will benefit literally millions of Americans in Medicare and Social Security yet conservatives are up in arms claiming that Speaker Boehner gave away too much (as if preventing massive disability benefits cuts, Medicare hikes and government default are bad things). 

Specifically, this Budget Deal:

  • Prevents a 19% cut in Social Security Disability Insurance benefits that would have occurred in late 2016
  • Ensures 7 years of certainty that the Social Security Disability insurance program will pay full benefits
  • Mitigates a 52% Medicare Part B premium increase for 30% of Medicare beneficiaries
  • Alleviates an increase in the Part B deductible for all beneficiaries, lowering it from a projected $223 to $167
  • Provides sequester relief to programs like the Older Americans Act, Low Income Home Energy Assistance Program and Social Security field offices.

This Budget Deal is good news for seniors but it’s far from perfect.  Unfortunately, the bill also:

  • Provides NO financial relief to seniors who will receive no cost of living adjustment in 2016.
  • Extends the Medicare provider reimbursement sequester and uses the savings to pay for unrelated programs.

Lastly, let’s make it clear that the biggest problem with the Budget Deal is that Congressional leadership continues to use middle-class benefits as hostages to try and force concessions on legislation that has nothing to do with Social Security, Medicare or Medicaid. 

With a new House Speaker, Rep. Paul Ryan, now in charge (and his views on slashing Social Security and turning Medicare into CouponCare are well known) we’ll likely face this battle again as soon as next month in the Transportation bill debate as conservatives hope to use benefit cuts to pay for highways.