In December 2016, former Representative Sam Johnson (R-TX) introduced a bill that proposed “reforming” Social Security 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 targeted his largest cuts on the youngest Americans, safely assuming that children in elementary school were not likely to know what would be in store for them if this bill were to be enacted, and that their parents and grandparents would not care.
Mr. Johnson’s bill was introduced toward the end of the 114th Congress. At the time, it appeared to be the opening salvo by House Republicans in their attack on Social Security, and many of the individual provisions in the bill continue to be promoted by conservative critics of Social Security. The provisions in this bill would do irreparable harm to the 65 million Americans who currently receive Social Security but, regrettably, it would also cut benefits for the 180 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 would see their benefits cut. The reason is that the “Chained” CPI, which is not based on seniors’ spending patterns, artificially under-measures inflation. While these reductions begin small, they aggregate over time, cutting more deeply as retirees live longer and are less likely to have other resources such as work or savings to fall back on.
- 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, thereby imposing a double burden on this segment of the beneficiary population. This would result in 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 would 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, the bill would impose 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.
Former Representative Johnson’s bill included 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 opposed former Representative Johnson’s bill when it was introduced, and we continue to oppose any prospective effort by other legislators to enact similar legislation that “reforms” Social Security by cutting benefits. 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 a poll we commissioned, fully 79 percent of Americans favored increasing Social Security benefits—and funding that increase by having wealthy Americans pay the same rate into Social Security as everyone else. An overwhelming 77 percent opposed raising the Social Security retirement age to 69.
Department of Government Relations, March 2022