Proposed Social Security cuts: seniors hit, millionaires glide

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Proposals for major cuts in Social Security, floated by deficit commission co-chairs Alan Simpson and Erskine Bowles last week, are an attempt to "bully" seniors "while Wall Street millionaires once again just skate on through scot-free."

That reaction by Edward Coyle, executive director of the Alliance for Retired Americans, was part of a flood of condemnation for the Bowles-Simpson proposals targeting Social Security.

One of the proposals is to cut Social Security benefits by changing the cost-of-living adjustment formula. That would start in 2012, so it would hit current as well as future beneficiaries.

"This will lower seniors' benefits by about 3 percent after they have been retired for 10 years, and by about 6 percent after 20 years," Coyle said.

"Today's 20-year-old workers who retire at age 65 would see their benefits cut by 17 percent if their wages average $43,000 over their working lives," he said, calling the plan "an attack on the middle class."

The Simpson-Bowles proposals would raise the retirement age for full benefits, currently 67 for those born after 1959, to 68 by 2050 and 69 by 2075. That amounts to a lifetime benefit cut.

The proposals would also change the way benefits are calculated - leading to another reduction in benefits.

Keep in mind that currently, the average retiree's annual Social Security benefit is $14,000, which is lower than the minimum wage, the Economic Policy Institute reports. "Three and a half million seniors are living below the poverty level, even with Social Security," says Ross Eisenbrey of the EPI.

The National Council to Preserve Social Security and Medicare said the Simpson-Bowles proposals would mean huge benefit cuts. "Workers who earned $37,400 annually (that's about half of Social Security recipients) would actually take a 35-41 percent cut!" the council said.

"While Simpson/Bowles promise these benefit cuts will only impact high income earners, there's a catch," the group said in a statement. "Anyone who made $38,000 a year during their working years is considered a ‘high income' earner. Yes, that's right."

People's World economics commentator Art Perlo says the Simpson-Bowles proposals would lower benefits for 80 percent of Social Security recipients - those who earned above about $25,000 a year - "on the excuse that they are ‘high income'." And this is at a time when retirees' other income, if any, from employer or private-savings pensions are all being cut, notes Perlo, who chairs the Communist Party USA economics commission. It's odd that the deficit commission co-chairs "claim that the biggest cuts are to the ‘highest' incomes - mainly in the $75,000-$150,000 range," Perlo said, yet incomes up to $250,000 are considered "middle class" when talking about tax cuts.

Currently, working class people shoulder the primary burden for paying into the Social Security fund - only the "first" $106,800 of income is subject to the Social Security payroll tax. The Simpson-Bowles proposals include raising the "cap" but only slightly. Critics say it lets the "really rich" off the hook.

"While the biggest negative impact of the proposals would be on low-income workers, there is something bad for everyone below the millionaire level," said Perlo. "Some of the proposals seem designed to give credence to the idea that the moderately well off are being penalized to help the poor. For example: the proposal to raise the minimum benefit while slightly lifting the Social Security cap (affecting those making between $106,80000 and about $125,000), but not touching significantly the income of the really rich."

"How about lifting the payroll tax cap entirely?" asks the National Council to Preserve Social Security and Medicare.

It's not only seniors who rely on Social Security, but also the disabled and surviving spouses and children of deceased workers.

The AARP called the deficit commission co-chairs' proposals "contrary to the best interest of American families."

"During these tough economic times, the last thing we should be considering is targeting the guaranteed, inflation-protected Social Security benefits that millions of Americans count on every day," said Nancy LeaMond, AARP executive vice president.

"Social Security can pay full benefits for at least 25 years," Perlo said. "The whole discussion is a diversion from the urgent need to provide useful, productive jobs for 30 million unemployed and underemployed Americans."

Photo: Alliance for Retired Americans/Henry Lowendorf CC 2.0

 

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  • If social security is cut at this time for recipients. Foreclosures will sky rocket. I'm sure there are millions of us who will lose their homes. Have these people ever been in need ? I doubt it I would like to see them try to live on maximum SS. Do they care? Doubtful. I told my US rep Lankford that unless they had walked in our shoes that they could never comprehend what it is like. He did't care he sent me a form letter thanking me for my thoughts. Wasn't that nice of him? All of our elected officials should have to do just so they know. After they are elected their consitiuents are fjorgotton, there theme is let's how much we can rape the middle class while we laugh all the way to the bank. Those adre my thoughts I'm sure there at leas a few who agree with me.ir.

    Posted by Frances Cole, 04/06/2013 10:51pm (1 year ago)

  • Please write the names of the politicians down. Vote them out the next election.

    Posted by j, 07/20/2011 4:32pm (3 years ago)

  • I am on disability and depend on this monthly check to pay my bills as i am disabled even though I am not retirement age. if mny heck and insurance gets cut out then I will be dead within six months due to the fact that I have a life threatening illness and will not be able to afford my medicines that are keeping me alive much less food or a place to live and am unable to go back to work due to my illness. Please instead of cutting the people who really need the social security checks and medicare and state insurance out of their inome why dont you look at the people who are still able to work (like my neighbors) but who are just to lazy to go to work and make the persons who have schookl age children get jobs or cut out their welfare. Also stop letting the drug addicts get disability just because they are a drug addict. When I had school age children and was getting food stamps I had to prove every week that I applied for at least 3 jobs whether I was hired or not at least I applied. Why doesn't the government try that again and also quit letting immigrants come here and get on welfare. There are too many people like me and my boyfriend who really need to be on disability and deserve it but at the same time there are too many 20 year olds who are going to pain clinics whgo have nothing wrong with them and are getting approved on disability only to get their medicine and sell it or misuse it. As for me I wish that I was able to go back to work and support myself but am unable to.

    Posted by virginia sheppard, 07/13/2011 8:14am (3 years ago)

  • RAISING THE CAP ON SOCIAL SECURITY TAXES IS THE SENSIBLE SOLUTION TO FINANCING SS. REDUCING COLAS IS ONLY A BURDEN ON THOSE WHO NEED SS THE MOST. ADDITIONALLY, IF A PERSON IS RECEIVING MORE THAN A MILLION DOLLARS A YEAR IN INCOME, HE PERHAPS COULD DO WITHOUT SS BENEFITS. ADDITIONALLY OIL COMPANIES CAN DO WITHOUT SUBSIDIES.

    Posted by DDT, 07/11/2011 12:39pm (3 years ago)

  • what is wrong with Washington,that they want to take away yet again, all that seniors have "PAID" into.These people have already paid their dues, where is the brains in DC or lack of..
    I can not believe that American would not revolt against this ,if you take away hard earned dollars paid for already,. do they really think we are DUMB.,just because they can not stay with in their limits of spending.and then take more away from us ,just where do they think the moneyis coming from..off the money tree in the back yard..I am so disguested with this countires politics..

    Posted by christine, 07/07/2011 10:27am (3 years ago)

  • Why does congress always want to punish the elderly. They are the ones who helped build this country. Why don't they cut their staff and their perks.

    The elderly should be respected not penalized.

    Posted by j, 06/18/2011 12:44pm (3 years ago)

  • What are you talking about ! it seems this is not correct!!

    Posted by lou cardella, 04/14/2011 6:00pm (3 years ago)

  • IF OUR ELECTED OFFICIALS HAD TO RELY ON SOCIAL SECURITY BENEFITS FOR THEIR RETIREMENT, YOU CAN BET YOUR SWEET A-- THAT THERE WOULD BE NO CUTS AND IT WOULD BE ENOUGH TO LIVE ON COMFORTABLY

    Posted by , 04/09/2011 9:21am (3 years ago)

  • This is another blatant attempt to give the American working class another kick while they are already down. At one time our Democracy meant "we the people" now as far as politics goes it's Republicans vs Democrats and there is no middle ground and no thought of what's best for all Americans. I worked hard all my life and didn't retire with a huge pension but with what I thought was enough. After 9/11 and the bank fiasco Social Security is a much larger part of my fiscal future. I still need to work part time to supplement my social security which by the way is still taken out of each paycheck. When are the top 2% going to be held to a standard that actually has them paying taxes? Our government can spend billions in bank bailouts so that the CEO's and their constituents can get bonuses as usual for doing such a dandy job while they want the average working guy to foot the bill. The average citizen has to say enough is enough!

    Posted by Dick Herfindahl, 03/29/2011 2:49pm (3 years ago)

  • Rich people win again, while the poor and elderly get screwed. What do those "concerned" politicians care?? They have it made.

    And if employers will allow people to work until they reach the proposed retirement ages will be a miracle. They're already getting rid of people when they hit 50 in many cases. Of course, they make it look like the person did something wrong---when they really didn't. And I've seen many cases of people who were reaching retirement age getting tossed---so they won't get those benefits they would have been entitled to. It will only get worse as that retirement age increases.

    People on Social Security who depend on it to live don't need to have that taken away from them. But there are some who probably don't need the Social Security benefits in the first place----like the RICH!!!!

    Posted by Barbara Burt, 03/14/2011 4:15pm (3 years ago)

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