Are Social Security cuts now ‘off the table?’ President Biden and GOP agree on that point
Will Social Security benefits be cut? Will you be paying more Social Security and Medicare tax?
Not anytime soon..
Looks like Social Security is “off the table,” President Joe Biden said Tuesday in his State of the Union address — and many Republicans signaled they agree.
Biden had noted that some Republicans have pushed to “sunset,” or re-evaluate the worth, of Social Security and Medicare every five years.
Republicans howled, insisting that was not so. In fact, House Speaker Kevin McCarthy and other GOP leaders have insisted they will not cut benefits.
Biden was apparently referring to Sen. Rick Scott’s plan last year that “all federal legislation sunsets in 5 years. If a law is worth keeping, Congress can pass it again.” The plan got virtually no support among fellow Republicans, and the Florida Republican said he would fight hard to preserve the program.
But there’s going to be a lot of talk — and posturing — about the future of Social Security as Congress and the White House struggle to find ways to cut spending and deal with the government debt ceiling.
The venerated program, which in December 2021 paid benefits to 6.16 million California residents, faces two challenges.
Its fund that pays retirees is expected to face financial trouble in 2034, according to its latest trustees report. Republicans, who now control the House, want big cuts in domestic spending.
Because Social Security consumes such a huge chunk of federal spending, it’s a tempting target for changes in the future.
Anyone willing to tinker with Social Security, though, faces a problem that dogged reforms for decades: Mention changes to Social Security, and Democrats quickly pounce while Republicans back off.
“They’re talking about reneging on the guarantee of Medicare and Social Security,” said Sen. Ron Wyden, D-Oregon,
If they try, he said, “they’re going to have to run over me as chairman of the Finance Committee.” That committee writes the Senate’s Social Security legislation.
Still, “you’re going to have to do something sometime. Maybe divided government is an opportunity to do it,” said Sen. John Cornyn, R-Texas, a senior Finance Committee member.
Social Security’s problem
The latest report from the program’s trustees put the looming crisis in stark terms: “Social Security and Medicare both face long-term financing shortfalls under currently scheduled benefits and financing.”
The trustees predicted that the fund that pays retirement and survivors benefits, “will be able to pay scheduled benefits on a timely basis until 2034.”
At that time, it said, “the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 77% of scheduled benefits.”
Another financial crisis, this one more immediate, involves the debt ceiling. It was reached earlier this month, and the Treasury Department is taking what it calls “extraordinary measures” to make sure the government pays its bills.
Those measures are only expected to be available until early this summer. McCarthy and Biden met last week, and Biden is expected to make some comments Tuesday.
There’s been no apparent movement on either side, so unless the stalemate is resolved in time, lawmakers risk a catastrophic default that could have devastating consequences for the national and global economy.
Howard Gleckman, senior fellow at Washington’s nonpartisan Tax Policy Center, estimated that Social Security represents about one-quarter of federal, non-interest spending.
If Republicans don’t tinker with defense spending, Gleckman calculated Social Security benefits would be cut by about 30%. If that cut were in effect this year, the average monthly benefit for a retired worker would drop from $1,827 to less than $1,300. That reduction could be somewhat lower because the government would get some help from savings on interest.
The impact of such cuts would be felt all over California, where 4.6 million retired workers over 65 get benefits. That includes 184,835 people in Sacramento County, 104,560 in Fresno County, 64,005 in Stanislaus County and 51,445 in San Luis Obispo County.
Will Congress act?
Last year, the House’s influential Republican Study Group, offered a plan to reform the program.
The plan would not affect benefits for any current retirees or individuals nearing retirement, and would create a new minimum benefit.
It would gradually increase the retirement age for full benefits to 70 by 2040, and allow recipients to invest their benefits in private accounts. That age is now gradually increasing, and people born in 1960 or afterwards will qualify at 67.
Republicans insist they’re not out to kill or dilute the program. “Let’s take those off the table” in any debt limit talks, House Speaker Kevin McCarthy, R-Bakersfield, told CBS’ “Face the Nation’ recently.
But the party’s “Commitment to America,” which McCarthy has championed as a blueprint for House GOP policy, says the party will “save and strengthen Social Security and Medicare,” without giving details.
Other prominent GOP voices also have ideas. Friday, former Vice President Mike Pence suggested last week allowing younger people to “take a portion of their Social Security withholdings and put them into a private savings account.”
Will anything happen?
“One thing Congress has never done is turn to the public and say what can you stomach?” said Mary Johnson, Social Security and Medicare policy analyst at the nonpartisan Senior Citizens League.
While older people, regardless of their politics, are very much against benefit cuts, the surveys have found younger people are more open to ideas.
People of all ages tend to be against allowing people to opt into a private system, Johnson said, as workers today already have private accounts — individual retirement accounts, 401 (ks) and so on — so they say they really don’t need another alternative.
What is more popular is taxing wealthier people. And, Johnson said, raising the retirement age is not easily dismissed in the survey. Her group polled 2,550 people last summer and found 39% supported raising the early eligibility age for partial benefits by one year from 62 to 63
“I’d like to hear what younger workers think of that,” she said.
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Lawmakers say they’re open to ideas. “Social Security is on the path to insolvency — both parties must work toward bipartisan solutions that will ensure Social Security is available for current and near-retirees while also protecting it for future generations,” said Rep. Ron Estes, R-Kansas, a Social Security subcommittee member.
But finding common ground has to clear an obstacle that’s been in the path of Social Security reform for nearly 40 years — politics.
“Unfortunately, Democrats have not been willing to negotiate in good faith, preferring to raise Social Security taxes and use any proposed reforms from Republicans as a political weapon to scare seniors,” Estes said.
Rep. John Larson, D-Conn., top Democrat on the House Social Security subcommittee, saw things a different way. “They believe this is something they have to give to their ideological base,” he said of Republicans’ threats to change Social Security.
Can’t we just talk, wondered Cornyn. In the end, he said, “Nobody’s going to get everything they want.”
This story was originally published February 7, 2023 at 6:00 AM.
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