Fiscal Committee Chairmen, Alan Simpson and Erskine Bowles, have argued their plan for Social Security is solely about solvency. Really? As the Social Security actuaries have said, beneficiaries would face a potential 22% benefit cut after 2037, if Congress does nothing. Yet under Simpson/Bowles, workers who earned $37,400 annually (that’s about half of Social Security recipients) would actually take a 35-41% cut! While Simpson/Bowles promise these benefit cuts will only impact high income earners, there’s a catch. Anyone who made $38,000 a year during their working years is considered a “high income” earner. Yes, that’s right. When it comes to raising the payroll tax, Simpson/Bowles worries that a .1% payroll hike phased in over decades might be too big a burden for workers making $100,000 a year, yet when it comes to benefit cuts you’re considered “upper income’ if you earn a third of that. In short, a so-called “high income” worker making $38,000 can afford to pay their taxes and take a benefit cut but don’t expect those making six-figures to pay their share of payroll taxes. Angry Bear describes it this way:
Coberly and I (and some others) have been warning for years about the dangers of turning Social Security from an insurance program with mild progressive transfers to a welfare system. Well this is a pure illustration of that, I can’t imagine any scheme designed to more undermine support for Social Security than one that calls for earners in the top 50% taking a cut even from the projected cut. The answer to a ‘crisis’ defined as an ultimate 25% cut in scheduled benefit is for upper income folk to take a 35-41% cut? All in an effort to save them a phased in 0.1% of payroll per year increase over the next 20 years?
National Committee Executive VP, Max Richtman, talked about the lack of balance in this proposal on Pacifica Radio’s Letters to Washington. Shared Sacrifice Another favorite line by fiscal hawks and these Fiscal Committee chairmen is the call for all Americans to sacrifice for the good of our country. We agree. However, as our President/CEO, Barbara Kennelly has said, the sacrifice in this plan is anything but shared:
“America’s retirees, disabled and their families had hoped for a balanced approach to solving our nation’s fiscal crisis. Unfortunately, that is not what we received in today’s report by the Chairmen of the President’s Fiscal Commission. This proposal relies far too heavily on benefit cuts which will hurt millions of Americans. Lowering COLA’s which hit even current retirees, raising the retirement age, and making benefit cuts in Social Security have nothing to do with solving this fiscal crisis and do not offer a balanced solution to debt reduction by any stretch of the imagination.”
How’s this for balance–the way Simpson/Bowles propose we get to long term solvency for Social Security is with 92% of the solution coming from benefit cuts for seniors, the disabled, survivors and their families. Forget the conventional wisdom, inside Washington and out, that the answer to long-term solvency would be a combination of revenue increases and benefit cuts. That type of compromise is tough enough to get these days, but it is also the only way to ensure a fair and balanced result. Is proposing a solution which is 92% benefits cuts truly and example of shared sacrifice?If we really want to preach balance, how about lifting the payroll tax cap entirely? The American people have said repeatedly they’ll pay a little extra to keep the modest benefits provided by Social Security and Medicare. Or, how about a financial transaction tax? Is it really so absurd to think that America?s wealthiest Americans and the industry that helped create this economic collapse in the first place share some of the sacrifice to fix it? By all accounts, neither of these options were seriously considered by Simpson/Bowles. So much for promises of a balanced approach with shared sacrifices. This plan isn’t even close.