Thursday, December 2, 2010

Social Security cuts are part of deficit plan

Social Security cuts are part of deficit plan ::
The new plan by co-chairmen Erskine Bowles and Alan Simpson, to be unveiled Wednesday, faces an uphill slog. Resistance is certain, not only because of the idea of raising the Social Security retirement age, but also because of proposed cuts to Medicare, curtailment of tax breaks and a doubling of the federal tax on a gallon of gasoline.

Though the plan appears unlikely to win enough bipartisan support from the panel to be approved for a vote in Congress this year or next, Bowles has already declared victory, saying he and Simpson have at least succeeded in initiating an 'adult conversation' in the country about the pain it will take to cut the deficit.
Look, I'm prepared to admit I may just be extra stupid, it's just not obvious to me how raising the Social Security retirement age helps reduce the deficit. When reporting on these plans, it might be helpful for a while to have a stock paragraph to include explaining how Social Security adds to the deficit (it doesn't) and how reducing benefits impacts the numbers. I think there are many people, like me, who are under the impression Social Security does not contribute to the deficit now, nor will it ever since by law it cannot take on debt.

Also, it might be helpful to show examples of how raising the cap on income subject to Social Security tax might accomplish the same goals as raising the retirement age and reducing benefits so those benefits don't have to be reduced when trust fund (currently running a surplus, BTW) is not sufficient to pay all the full level of benefits ... in 2037 or so. I think that's how an "adult conversation" would proceed. Focusing on raising the retirement age puts all the pain of this process on those who can least afford it: the people who will be relying on the benefits. If, ultimately, it takes benefit cuts to stay afloat, so be it. However, let's also talk about how the wealthy, who won't need Social Security but can still collect it when they retire, can help share the load.
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