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Social Security Reform Act of 2016

Representative Sam Johnson (R-TX) has introduced a bill that shows how Social Security can be “reformed” by slashing benefits for everyone.  Sadly, in what would be a massive violation of the commitment between the generations that is at the heart of Social Security, Mr. Johnson targets his largest cuts on the youngest Americans, safely assuming that children in elementary school aren’t likely to know what would be in store for them if this bill were to be enacted and that their parents and grandparents won’t care.

Mr. Johnson’s bill was introduced toward the end of the 114th Congress and appears to be the opening salvo by the House Republicans in their attack on Social Security.  This bill would do irreparable harm to the 60 million Americans who currently receive Social Security but, regrettably, it would also cut benefits for the 167 million Americans currently paying into Social Security so that they might have some economic security when they retire.  It even cuts benefits for children who are currently too young to be contributing to the program.

What does this bill do?  For starters, it demonstrates that, if you ignore the well-being of the American people, it is possible to put together a package of benefit cuts that are so massive that the author can claim he’s put together a plan that “saves Social Security.” 

Here are some of the provisions included in “The Social Security Reform Act”:

  • Cut the COLA.  By adopting the “Chained” consumer price index (CPI) for the purpose of determining annual Social Security cost-of-living adjustments (COLA), all individuals currently receiving Social Security and those who will receive it in the future will see their benefits cut.  The reason is that the “Chained” CPI, which isn’t based on seniors’ spending patterns, artificially under measures inflation.  While these reductions begin small, they aggregate over time, making the reductions especially onerous on those who live especially long lives.
  • Deny COLAs for Many.  Beginning in 2019, no COLA would be provided to higher-income Social Security beneficiaries.  These are the same seniors who currently pay higher income-related Medicare premiums, and would come as a double whammy for this segment of the beneficiary population.  This is a huge benefit reduction for those who would be affected by it.
  • Slash Benefits.  The bill makes a number of changes to the benefit formula to cut retiree Social Security benefits.  These changes are obscure and highly complicated, guaranteeing that almost no one will understand how they work.  But everyone whose benefits are calculated using this new formula will see the effect—a reduction in monthly benefits of as much as 33 percent for higher earners; a reduction of about 13 percent for lower earners.
  • Raise the Retirement Age.  This bill raises the “normal” retirement age (NRA) by three months per year for those attaining age 62 in 2023 until it reaches age 69 for those attaining age 62 in 2030.  In other words, a two year increase in the NRA, which translates into a 13.5 percent cut in monthly benefits for everyone age 49 or younger.
  • Cut Benefits for Spouses and Children.  Mr. Johnson’s bill also cuts benefits for the spouses and children of some retired and disabled workers becoming newly eligible for benefits in 2023.  When fully phased in, the provision would limit benefits to no more than one-half the benefit of a hypothetical worker with earnings equal to the national average wage index. 

Representative Johnson’s bill includes a number of minor provisions, such as a “Special Minimum Benefit” for lower income workers and elimination of the retirement earnings test for younger beneficiaries under NRA, that offset some of the benefit cuts that are in the bill.  However, the benefit cuts are of such magnitude as to dwarf these benefit improvements.  The important point is that under this plan, the vast majority of retirees would get less than they’ve been promised under current law.  And the cuts would only deepen as retirees age and the cuts related to the COLA compound over time. 

The National Committee to Preserve Social Security and Medicare opposes Representative Johnson’s bill and, in so doing, we believe our view is consistent with the view of the vast majority of Americans, who want to strengthen rather than cut Social Security.  In our recently completed poll, 79 percent of Americans favor increasing Social Security benefits—and funding that increase by having wealthy Americans pay the same rate into Social Security as everyone else.  A whopping 77 percent oppose raising the Social Security retirement age to 69.

“If we needed any further proof that Congressional Republicans are bent on gutting Social Security, this last-minute bill at the close of the 114th Congress is it. Representative Johnson will no doubt reintroduce his bill in the 115th Congress.  We at the National Committee to Preserve Social Security and Medicare are gearing up for battle over this attack on working Americans.

President Trump has a veto pen.  Now is the time for Mr. Trump to re-affirm his campaign promise “not to touch” Social Security and Medicare.  So far, he has been uncharacteristically silent on this vital issue.  I promise that we will hold him accountable…” - Max Richtman, NCPSSM President/CEO






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