‘Technical Fix’ for Social Security Will Shrink Benefits to the Poor

‘Technical Fix’ for Social Security Will Shrink Benefits to the Poor

‘Technical Fix’ for Social Security Will Shrink Benefits to the Poor

The ugly part of this gimmick is that it punishes most severely the very people who most need help.


The newspapers say the Congressional supercommittee is stalemated on how to reduce the federal deficits, but Democrats and Republicans already agree on one thing. Both parties want to whack Social Security, hoping the old folks won’t notice. Some policy wonks have shown the politicians a sly way to shrink Social Security benefits and call it a “technical fix.” By changing the formula for calculating the annual cost-of-living increases that beneficiaries normally receive, small differences add up to big pain for old folks. The same adjusted formula would be applied to disability benefits and military and veteran pensions.

The beauty of this gimmick is that it looks trivial at first and most people probably wouldn’t notice. But the impact compounds every year afterwards. The personal loss gets larger and larger the longer retired people live on. The Congressional Budget Office calculates savings for government of $217 billion over ten years, barely a scratch in a federal budget of $13 trillion.

But the ugly part of this gimmick is that it punishes most severely the very people who most need help—the lame and the halt and the poor. In the austerity hysteria that grips Washington, that has been a standard approach to deciding who accept sacrifices. If someone must lose, the poor are an easy target—a lot easier than raising taxes on the affluent and super-rich or whacking away at the bloat and waste at the Pentagon.

In the first year of this fix, Social Security recipients at retirement age would lose only about $100 in expected benefits. Ten years later, they would be losing $560 a year. If they are fortunate enough to be alive in their 90s, they would lose $1,400 a year or 9.2 percent of their Social Security check. This is perverse public policy—the older people get the more they will need for medical expenses and the more income they must sacrifice to please the budget cutters.

An advocacy group called Strengthen Social Security defined the losses in everyday terms familiar to poor people—shopping for groceries. After ten years in retirement, the COLA cut would cost recipients twelve weeks of food expenditures. After two decades, it would cost twenty-one weeks of groceries. For millions of Americans, that will not sound trivial.

Republicans always seem ready to go for deals that punish the poor first. What’s shocking is the Democrats. The six Democrats on the supercommittee included the Social Security COLA cut in the package they proposed to their Republican counterparts. That list was blessed by majority leader Harry Reid even though Reid had previously ruled Social Security off the table. Senators Max Baucus of Montana and John Kerry of Massachusetts were reportedly most zealous in promoting the hit on Social Security.

Not to worry, some Democrats insisted privately. They included Social Security as an eligible target, they explained, only to entice Republicans to make a deal that includes tax increases for the wealthy. The Dems expect Republicans to reject the offer, and so Social Security is safe.

Nevertheless, this is dangerous politics, because we know from previous episodes that Democrats are rather inept at the game of bargaining. Republicans will stand their ground and call the bluff. In the end, the Democrats’ initial concession becomes only an opening bid. Republicans always respond with higher demand. So Dems yield by splitting the difference—that is, caving in.

If this same pattern emerges in the supercommittee melodrama, people must remember who blinked first. If the Democratic Party fails to defend its own greatest legacy from right-wing assault, voters may ask themselves, Why punish Republicans when it was the Democrats who sold out Social Security?

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