Is Social Security On The Gop’s ‘chopping Block’ As Biden Claims Experts Weigh In
The program, which 65 million Americans rely on, faces a funding shortfall.
Social Security — long referred to as the “third rail” of American politics — so charged as to be fatal if touched — is back in the spotlight as the midterm elections near.
President Joe Biden has made it a key campaign theme — repeatedly asserting the benefit program is “on the chopping block” if Republicans win back control of the House and Senate.
“Your Social Security you paid for your whole life is on the ballot,” Biden said this week at a virtual fundraiser in support of a House Democrat.
Biden has seized on two proposals from GOP Sens. Rick Scott of Florida and Ron Johnson of Wisconsin, who say Social Security should be up for reauthorization by Congress every five years or annually, respectively.
The two senators have pushed back, saying their ideas are intended to fix the program, not to eliminate it.
Johnson argues the plan to make the funding discretionary, rather than mandatory as it’s been since the program’s creation, will boost the Social Security Administration’s finances as it experiences shortfalls.
“I want to make myself very clear, I want to save Social Security. I want to save Medicare,” Johnson said at last week’s debate against his Democratic opponent Mandela Barnes, who made sure to mention Johnson’s past comments calling Washington’s handling of Social Security a “Ponzi scheme.”
Beware Of Republicans Trying To Cut Your Social Security Benefits
Republican politicians are scared to death. They seek to create a smoke-filled room to provide political cover. Of what issue are they so terrified? Social Security.
Republicans never acknowledge that they support slashing and even ending Social Security.
Republican politicians say they support Social Security. They say they want to eliminate its projected shortfall. But do they offer a substantive proposal? Absolutely not. Instead, they hide behind process to avoid political accountability.
They want Democrats to hide with them behind closed doors. The goal is to come up with an unamendable package, supported by Democrats, that is full of benefit cuts and gives Republicans political cover to rob working families of their earned benefits. Fortunately, the Democrats will have no part of it.
Democratic policymakers are offering concrete proposals for all the world to see. They are begging their Republican colleagues to release a proposal of their own.
The Democrats are calling the Republicans’ bluff, but the Republicans are refusing to show their cards. Why? Because they are afraid. The reason they are so afraid is not hard to see. They are radically out of step with their own voters.
Republican efforts to hide their desire to cut benefits were on full display at last week’s Senate Budget Committee hearing on Social Security.
During the hearing, Sen. Chris Van Hollen politely but forcefully called out the hypocrisy which all could see:
Social Security In Grave Danger If Gop Retakes Congress Advocates Warn
by Jake Johnson Common Dreams
Social Security and Medicare defenders warned Tuesday, October 11 that the popular government programs will be in grave danger if Republicans win control of Congress in the upcoming midterms, pointing to new reporting on GOP plans to use a looming fight over the nations debt ceiling to pursue benefit cuts.
Citing interviews with four House Republicans hoping to serxve as chair of the chambers budget committee, Bloomberg Government reported that Social Security and Medicare eligibility changes, spending caps, and safety-net work requirements are among the top priorities for the GOP if it retakes the House in next months elections.
Representatives Jason Smith , Jodey Arrington , Buddy Carter , and Lloyd Smucker signaled that next years deadline to raise or suspend the debt ceiling is a point of leverage to extract concessions from Democrats, including potentially raising the retirement age and reducing Social Security benefits, the outlet noted.
Such a strategy would fit with the House GOPs recently released policy agenda, which opens the door to Social Security and Medicare cutssomething Republican candidates have repeatedly hinted at on the campaign trail despite the programs popularity.
Our main focus has got to be on nondiscretionaryits got to be on entitlements, Carter told Bloomberg Government on Tuesday.
Recommended Reading: Social Security Determination Phone Number
Joe Biden Calls For Means
The second time President Biden called for Social Security benefit cuts happened more recently.
In May 2018, nearly a full year before declaring his candidacy for president, Biden advocated for benefits means-testing while speaking at a Brookings Institution event. Said Biden:
Paul Ryan was correct when he did the tax code. What’s the first thing he decided we had to go after? Social Security and Medicare. Now, we need to do something about Social Security and Medicare. That’s the only way you can find room to pay for it. Now, I don’t know a whole lot of people in the top one-tenth of 1% or top 1% are relying on Social Security when they retire.
While Biden’s remarks primarily emphasize the need to progressively increase payroll taxation on high earners, they also alluded to the idea of means-testing for benefits.
Means-testing would involve partially or fully removing Social Security payouts to eligible recipients based on predefined annual income thresholds. In other words, it would ensure that individuals and couples who don’t need Social Security benefits to live comfortably would receive a reduced payout, or perhaps none at all. Even though this would only affect a small percentage of beneficiaries, it’s nevertheless a call for benefits to be cut.
A Congressional Attempt At A Solution
Rep. John B. Larson , who is chairman of the House Ways and Means Social Security Subcommittee, has introduced Social Security 2100: A Sacred Trust, a bill that aims to strengthen the trust funds by raising taxes on high earners and makes up more than half the estimated shortfall in the Social Security Trust Funds. It also expands benefits in a number of ways, including the following four:
- Provides an increase for all beneficiaries equivalent to an average of 2% of benefits to make up for inadequate cost-of-living adjustments since 1983.
- Improves the annual cost-of-living adjustment formula to better reflect the costs incurred by seniors through adopting whats called a CPI-E formula.
- Raises the minimum benefit to 25% above the poverty line and ties it to wage levels to ensure that the minimum benefit does not fall behind.
- Repeals the windfall elimination provision and government pension offset that currently reduces Social Security benefits for many government employees.
The response among some interest groups has not been positive. The Committee for a Responsible Budget slammed Larsons measure as a step backwards. The bill is a substantial downgrade from 2019s Social Security 2100 Act, which weve praised as a responsible solution to Social Securitys financial troubles. Whereas would have restored the program to sustainable solvency, A Sacred Trust would close half the solvency gap on paper and would actually worsen solvency once gimmicks are removed.
You May Like: Social Security Office Elizabethtown Ky
Raise The Full Retirement Age
The full retirement age is the age at which you get 100% of benefits promised. For most people, its 66 or 67. The 1983 reforms raised the age from 65 to 67, but the changes didnt take effect for 17 years to give people time to adjust work and savings behavior to the reduction in benefits, said Johnson. The 1983 changes to the full retirement age amounted to about a 12% reduction in benefits, he said.
There has been talk of raising the age to 69. That, however, would penalize workers with physical jobs that dont allow them to work longer and who may have to claim Social Security early. Many people claim at the earliest age, 62, which means a 30% reduction in benefits compared with waiting to claim until full retirement age.
Social Securitys Finances Are Slightly Improved But Remain Perilous
Social Securitys finances are slightly improved relative to last year but have worsened substantially over the last dozen years. The last Social Security Trustees report, released in August 2021, estimated an insolvency date of 2034 and a 75-year actuarial imbalance of 3.54 percent of taxable payroll. The Trustees now project Social Security will remain solvent until 2035, one year later than last years estimate, and faces a 75-year shortfall of 3.42 percent of payroll.
Relative to last year, economic changes improved the 75-year shortfall by 0.13 percentage points of payroll. Specifically, increases in real interest rates through 2024 improved the actuarial balance by 0.02 percentage points of payroll, increases in assumed potential GDP improved the balance by 0.03 percentage points, and other factors improved the balance by 0.07 percentage points.
Changes in disability assumptions, especially from lower assumed applications, improved the actuarial balance by an additional 0.07 percentage points of payroll relative to last year. As many workers with disabilities went on expanded unemployment benefits in 2020 and then returned to the workforce in 2021 and 2022, this improvement has helped extend the life of the SSDI trust fund.
Most of the remaining change is due to the new projection window. Including the year 2096 in the Trustees 75-year solvency projections worsened the 75-year actuarial imbalance by 0.06 percentage points of payroll.
Recommended Reading: Social Security Office Williamsburg Va
Other Factors Affecting Your Social Security Check
If you retire before full retirement age and your income goes up instead of down for any reasonyou sell off a high-value asset, you start a profitable business, or you earn a lot as a consultant or freelancerthen that could substantially impact what you get from Social Security, at least until you reach full retirement age.
Fewer than one in 10 adults polled by the Nationwide Retirement Institute understand the factors that determine the maximum Social Security retirement benefit.
Don’t Let Social Security Cuts Wreck Your Retirement Plans
For millions of retirees, Social Security benefits make the difference between enjoying a comfortable lifestyle and struggling to make ends meet. In fact, nearly one-quarter of married couples and close to half of unmarried beneficiaries depend on their monthly checks for at least 90% of their retirement income, according to the Social Security Administration.
However, Social Security may not be as reliable as it once was, and there’s a chance benefits could be reduced or even eliminated entirely in the relatively near future. That could spell disaster for current and future retirees, but there are ways to create a more financially secure retirement regardless of what happens to Social Security.
Image source: Getty Images.
Also Check: Social Security Office Merrillville Indiana
Understanding The 2022 Midterm Elections
midterm elections are likely toshift the political landscape and impact what President Biden can accomplish during the remainder of his first term. Heres what to know.
When are the midterm elections? The general election is Nov. 8, but the primary season is nearing completion, with voters selecting candidates in the New York and Florida primaries Tuesday. Heres a complete calendar of all the primaries in 2022.
Why are the midterms important? The midterm elections determine control of Congress: The party that has the House or Senate majority gets to organize the chamber and decide what legislation Congress considers.Thirty six governors and thousands of state legislators are also on the ballot. Heres a complete guide to the midterms.
Problems Facing Social Security
The program is funded on a pay-as-you-go basis through a payroll tax that goes toward a retiree’s monthly payments. But there’s currently more people taking out of the system than there are workers putting into it, leading to an imbalance — one that’s expected to continue to grow.
Some Republicans, Scott included, have said Social Security will go bankrupt — a claim that’s not true, according to Vanderbilt Law School professor Frank Bloch.
“It may be true that in a couple of years or so, they can’t pay the current level of benefits,” Bloch, an expert on Social Security and other benefit programs, told ABC News. “But the idea of running out of money is a red herring. It’s just never going to happen.”
The Social Security trust fund, which pays out benefits, estimates its excess reserves will be depleted by 2034. Once depleted, the fund would be able to cover only 77% of scheduled benefits.
“The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them,” the board of trustees recommended in its 2022 report.
Recommended Reading: What Percent Is Social Security Tax
Actuarial Status And Budget Scoring
The requirements in the law for the annual report of the Social Security Board of Trustees are specific on the nature of the analysis that is desired. Although the OASDI program is highly dependent on the trust fund assets for solvency, and these assets are held in Treasury securities, the assessment of the actuarial status of the program is separate from direct consideration of implications for the federal government budget.
An additional important distinction in trust fund versus budget scoring is the assumption about current law. In the trustees report, careful distinction is made between the cost of the programreflecting scheduled benefits, and the actual expendituresreflecting the benefits that would be payable subject to the limits imposed by the inability of the trust funds to borrow. If the trust funds ever become exhausted, expenditures thereafter would be limited to the amount of continuing tax income. It is projected in the 2009 Trustees Report that only 76 percent of scheduled benefits would be payable and could be paid at the time the trust fund is exhausted in 2037. This limitation not only places an absolute braking force on the spending that is possible by the OASDI program, but also forces Congressional action before exhaustion of the funds.
Benefit Cuts Could Be Coming Here’s How To Prepare
Social Security benefits can make or break retirement for many older adults, as many retirees rely on their monthly checks for some or all of their income.
The Social Security Administration recently released its latest Board of Trustees report, which includes information about the future of the program — and whether there might be benefit cuts on the horizon. Here’s what you need to know.
Image source: Getty Images.
Don’t Miss: Social Security Requirements For Disability
Here’s How The Gop Could Remove $174 A Month From Retirees’ Paychecks Without A Direct Cut
On Capitol Hill, both political parties have acknowledged that Social Security needs some TLC. Unfortunately, neither party is in the same ballpark as to how best to fix what’s estimated to be a $13.9 trillion shortfall over the next 75 years.
What isn’t in doubt, though, is that if Republicans were able to implement their two most prominent solutions, every beneficiary would see some form of reduction in their payout.
The GOP has long favored cost-cutting as the best means of reducing Social Security’s shortfall. The most commonly touted method of tackling this would be by gradually raising the full retirement age — i.e., the age at which you become eligible for 100% of your monthly payout. Currently set to peak at age 67 in 2022 for those born in 1960 or later, Republicans would like to see this figure gradually increased to age 70. Such a move would require future generations of retirees to either wait longer to collect their full payout or to accept a steeper up-front reduction by claiming early. No matter their choice, lifetime benefits, and therefore program outlays, would be reduced.
But the thing about raising the full retirement age is that it takes a long time to work. Meanwhile, the other Republican proposal — changing Social Security’s inflationary tether from the Consumer Price Index for Urban Wage Earners and Clerical Workers to the Chained CPI — could yield modestly faster savings.
Image source: Getty Images.
States Most Hurt By Social Security Staffing Cuts
Some states have been more affected by those budget cuts than others, the Center on Budget and Policy Priorities found.
Social Security’s staff was reduced by 15% between 2010 and 2021. Ten states lost more than 20% of their Social Security staff since 2010. They include Alaska, Indiana, Iowa, Kansas, Louisiana, Ohio, Virginia, Washington, West Virginia and Wisconsin.
Four states Alaska, Iowa, Virginia and West Virginia lost more than 25%. The same goes for Puerto Rico.
The agency’s Disability Determination Service employees, who decide whether people qualify for either disability or Supplemental Security Income benefits, shrank by 16% between 2010 and 2021. Eight states lost more than 30% of their DDS staff, according to the Center on Budget and Policy Priorities. The states most affected are Georgia, Illinois, Kansas, Montana, South Carolina, Tennessee, Texas and West Virginia.
Recommended Reading: Call The Social Security Administration
Is Social Security A Reliable Source Of Income
Social Security can have a major impact on your retirement, but it’s not perfect. While it’s not necessarily a bad thing to depend on your benefits to some extent in retirement, it’s wise to have a backup plan in case your monthly checks are reduced.
As a general rule, Social Security benefits should only make up roughly 40% of your pre-retirement income. But the less you can depend on them, the less affected you’ll be by potential benefit cuts.
Social Security benefits are a lifeline for many retirees, and staying informed about the program’s future can be helpful. While nobody knows whether benefits will be cut or not, taking steps to prepare now can ensure you’re ready no matter what happens.
The Motley Fool has a disclosure policy.
Gen X: Plan On A 10% Reduction
If you were born 1965 through 1980, planning for your retirement income becomes more important than ever, warns Mantell.
Elsasser recommends planning on a 10% reduction in your Social Security benefits and doing retirement projection that includes a reduced Social Security amount to balance your lifestyle today with the lifestyle youd like to live in retirement.
The good news about this bad news? For the 65 million of you who are between the ages of 41 and 56, you are in your peak earnings years, says Mantell. And that means you can and will need to ramp up your personal savings.
Youll be well-served to rethink, rebudget and redesign your spending and your savings strategy in case Social Security delivers less in income than currently projected, she cautions. You have time on your side, and every $1,000 or $2,000 or $5,000 you can sock away now will increase your income for retirement and balance out the trade-offs that you may have to make.
And whats the worst-scenario if you ramp up your savings and theres cut in Social Security benefits? You end up with more than you need, says Elsasser.
Don’t Miss: Both Social Security And Medicare