Yet another in a long line of deficit hawk fiscal reports has been released today, this one by Fiscal Commission member Alice Rivlin and former GOP Senator Pete Domenici. Once again, cutting Social Security and Medicare benefits play a prominent role while largely ignoring the fact that our deficit crisis is really a healthcare crisis. The proposal, also ignores the fact that Social Security is not responsible for our deficits and without the $2.6 trillion dollar trust fund built up by American workers over decades, it would actually be much worse. Like the Simpson/Bowles proposal, this plan would cut benefits, reduce theCOLA and even though it doesn?t explicitly raise the retirement age it achieves basically the same end result :
This plan would “index the benefit formula for increases in life expectancy” starting in 2023. In both cases, the net result would be lower monthly benefits. It would also dramatically reduce benefits by changing the calculation of cost-of-living adjustments, and by chopping checks for top quarter of beneficiaries.
One approach unique to the Rivlin/Domenici plan is a one-year tax ?holiday? that suspends payment of $650 billion in Social Security payroll taxes for employers and employees. This tax holiday isn’t expected to affect the solvency of the trust funds because the authors claim the funds will be reimbursed in full from general revenues. Hmmmm. Let?s think about the current debate over extending the Bush tax cuts which have been scheduled, since their passage, to expire this year. The American people are now being told by deficit hawks that allowing the tax law to expire as promised is a ?tax hike?. Why wouldn?t they make the same argument about this payroll tax cut when it expires one year after its passage? Thereby positioning Social Security to lose $650 billion each year in lost payroll tax revenue, forcing it to be funded by general revenues (which we don?t have by the way). In short, future Social Security funding is thrown into the deficit/debt debate in an unprecedented way.Social Security has no place in a conversation about solving our deficit problem. Commission member Rep. Jan Schakowsky understands that. She?s proposed a deficit plan that doesn?t force the middle class to foot the bill. She?s proven it can be done, if there?s the political will to do it.Schakowsky proposes cutting $427.7 billion from the federal budget deficit by 2015, along with $200 billion in new stimulus spending to create jobs, $144.6 billion in tax increases, $110.7 billion in defense cuts and $17.2 billion in healthcare savings through a public option. The Huffington Post reported on her plan this way:
Schakowsky’s recommendations stand in stark contrast to the Bowles-Simpson recommendations which would reduce the rate of increase of Social Security benefits and gradually raise the retirement age, among other things.“Social Security has nothing to do with the deficit,” Schakowsky told reporters. “Addressing the Social Security issue as part of the deficit question is like attacking Iraq to retaliate for the September 11 attacks,” said Schakowsky.
And these deficit hawk proposals are being sold in much the same way?if you don?t support cutting benefits to millions of American retirees, the disabled, survivors and their families then you?re a ?political coward.?