As Congress considers ways to cut long-term spending, some have proposed Commissions as a method for developing bipartisan consensus on restructuring Social Security. Every working American has a tremendous stake in the future of this earned benefit program, not only as the foundation of their own retirement security but also as critical support for their families in the case of severe disability or the death of the family breadwinner.
Social Security must undergo changes both to ensure its long-term solvency as well as to enhance benefits whose value has eroded in the half-century since Social Security was last improved. However, the future of this critical program must not and should not be determined as part of a budget cutting exercise. Instead, the committees with jurisdiction over Social Security should hold hearings, develop legislation that has strengthening this program for the American people rather than budget cutting as its primary mission, and Congress should vote on any consensus package produced under the regular rules of the House and Senate.
Commissions are designed to squeeze every possible dollar of savings out of Social Security without consideration for the adequacy of benefits during their deliberations. They are intended as a vehicle for enacting deep cuts to Social Security and Medicare that could never pass Congress on their own because of their unpopularity with the voting public. They are inevitably designed to avoid political accountability for enacting cuts to earned benefits that will unravel the foundation of economic security for generations.
The most recent example of the harm that can be proposed by commissions are the December 2010 recommendations of the National Commission on Fiscal Responsibility and Reform, co-chaired by Erskine Bowles and Alan Simpson. This Commission’s recommendations for Social Security and Medicare failed to reflect a balanced approach in addressing the nation’s fiscal imbalances. Their proposal relied far too heavily on benefit cuts which would hurt millions of Americans.
• The proposals to cut benefits included in the co-chairmen’s recommendations that can be expected to again be considered by any new commission are provisions that would:
• Cut Social Security by Raising the Retirement Age to 69 – The report called for a gradual increase in the full retirement age to 68 by 2050 and 69 by 2075, with further increases indexed to longevity. The plan also recommended parallel increases in the early retirement age from 62 to 64. Increasing the retirement age is a benefit cut pure and simple and would harm the retirement security of generations of Americans. Similar retirement age increases to age 70 and beyond are clearly contemplated to be part of any new recommendations.
• Cut Social Security by Reducing Cost-of-Living Adjustments (COLAs) – Bowles-Simpson proposed adoption of a different method of calculating the cost-of-living adjustment that would almost immediately result in smaller COLAs, impacting even current retirees. This proposal was estimated to lower benefits by approximately 3 percent after 10 years of retirement and 6 percent after 20 years of retirement.
• Cut Social Security by Altering the Benefit Formula – Bowles-Simpson proposed massive changes to the benefit formula that would substantially reduce benefits for millions of future retirees. The cuts, described as “moving to a more progressive benefit formula”, would have cut benefits for workers beginning with $38,000 in median lifetime incomes in 2010 dollars. Similar proposals have been advanced and could be expected to cut benefits, not for the truly wealthy, but for the heart of the middle class.
• Cut Medicare by Increased Cost Sharing for Seniors – Their report included proposals that would lead to hundreds of billions of dollars in new Medicare cuts, over $100 billion of which would come directly out of the pockets of seniors in the form of increased cost-sharing. The average senior is already spending 30 percent of his/her Social Security benefit on Medicare out-of-pocket costs alone; these proposals would increase that amount.
• Cut Medicare by Reducing Provider Reimbursements – Bowles-Simpson included a new round of cuts in Medicare provider reimbursements, which could leave seniors without access to affordable health care (as providers may stop treating Medicare beneficiaries).
• Social Security did not contribute to the federal debt and deficit. Furthermore, neither Social Security nor Medicare should be the targets of so-called reform measures that cut vital earned benefits simply for the purpose of balancing the budget. In fact, according to the National Committee’s most recent nonpartisan polling, Americans across all ages and party affiliations are solidly against cutting Social Security and Medicare to reduce the deficit.
Action Requested for Members of Congress: Given any plan’s likely disproportionate reliance on cuts to Social Security and Medicare benefits, we urge members of Congress to oppose any commission tasked with proposing “reforms” to Social Security or Medicare.