Republican opposition to a plan that would shore up a critical government safety-net program amounts to a new front in the GOP's class war and could equal a "death sentence" for many poor recipients, defenders of Social Security said this week.
The White House has proposed shifting money between two Social Security accounts in order to avert deep cuts in disability payments—specifically, reallocating a small portion of the Social Security payroll tax from its old-age account to disability for five years—as has been done numerous times in the past.
The AARP and other elder advocacy groups support the strategy, which would extend by 17 years the life of the disability reserve, currently projected to be exhausted by the end of 2016, according to acting commissioner of the Social Security Administration Carolyn Colvin.
"Since most disability recipients receive barely $1,200 a month, a cut of nearly 20 percent could mean the difference between affording food, medicine, clothing or paying bills. It is an unspeakable option and one that we are determined to prevent."
—Senator Bernie Sanders
And it would save lives, she added. "I don’t want to be dramatic, but I've worked with this population my whole career," Colvin said at a Senate Budget Committee hearing held Wednesday. Cutting already paltry disability benefits, she declared, would "give them a death sentence."
Republicans oppose the practice of shifting funds. On the first day of the new GOP-controlled Congress, the U.S. House passed a measure making it more difficult to move funds between separate accounts maintained by the Social Security Administration.
But failure to allow the reshuffling would "lay the groundwork for a 19 percent cut in disability benefits," according to a report (pdf) issued Tuesday by Sen. Bernie Sanders (I-Vt.). "That’s a horribly devastating cut for individuals—most of whom are in their 50's and in poor health—to absorb beginning next year. In fact, since most disability recipients receive barely $1,200 a month, a cut of nearly 20 percent could mean the difference between affording food, medicine, clothing or paying bills. It is an unspeakable option and one that we are determined to prevent."
What's more, the move is "a cynical attempt to divide the senior population from the disability community," charged the report.
Analyst Richard Eskow, a fellow at the Campaign for America's Future, described the push as "a new front" in the what he dubbed a "Republican Class War."
"They didn’t say they were conducting a class war, of course," he wrote of Republicans on the Senate Budget Committee. "Instead, they claimed that they were concerned about the future financial stability of the Social Security disability program. They’re expressing that concern by blocking an adjustment between trust funds that would restore it to financial health, something previous Congresses have done 11 times in the past."
In a scathing indictment published Wednesday, LA Times columnist Michael Hiltzick blasted the logic behind the GOP's efforts.
"Chairman Mike Enzi (R-Wyo.) not only displayed a shocking level of ignorance of Social Security and the disability program, but offered no solutions whatsoever to the looming crisis—which he repeatedly mischaracterized," Hiltzick wrote. "Enzi also trotted out one of the hoariest lies about Social Security in the conservatives' playbook: the claim that there's no money in either the old-age or disability trust fund."
[T]his assertion is nothing but an attempt to cheat working Americans of the benefits they've paid for. The trust funds hold trillions of dollars of U.S. Treasury bonds bought and paid for by payroll taxes collected from American workers since 1983; these transfers have been certified, in writing, every year by U.S. treasury secretaries and other cabinet members, Republican and Democrat, and accepted by Congress. If the money's gone, they should all go to jail—but you won't hear that said by Enzi or his cronies.
The only way the money can be judged "spent" is if Enzi and the rest of Congress vote to cut the benefits workers already have paid for. That's what he seems to be plotting.
Progressives charge that this fight is about much more than an obscure rule change or account transfer. In an email to supporters sent Wednesday night, Sen. Elizabeth Warren (D-MA) lambasted the GOP's "ideological war on our most important national safety net."
And Sanders echoed Warren's call. "Republicans are manufacturing a phony crisis in Social Security in order to cut the earned benefits of millions of the most vulnerable people in this country," he said. "The American people won’t let them get away with it."
Sanders, for his part, has proposed "scrapping the cap that allows multi-millionaires to pay a much smaller percentage of their income into Social Security than the middle class." He claims that increasing the size of that cap could bolster funding for the program past 2060.
"Inequality is our era’s gravest economic challenge. When it comes to meeting that challenge, Social Security isn’t a problem; it’s part of the solution."
—Richard Eskow, Campaign for America's Future
Currently, the amount of earnings that are subject to the payroll tax each year is capped at $118,500. Income above that level is not subject to the tax, which means a Wall Street CEO making $20 million, for instance, only pays into the fund on the first $118,500 of income.
As Nicole Woo of the Center for Economic & Policy Research noted at The Hill, this means that as of this week, "the top 1 percent of American workers finish[ed] paying their Social Security payroll taxes for the year."
Woo concluded: "As the House and Senate continue to debate the merits of changes to Social Security, raising or eliminating the payroll tax cap should be a leading contender. After all, what other option wipes out over two-thirds of the program's projected shortfall, avoids both benefit cuts and middle-class tax increases and is supported by a wide majority of Americans?"
As Eskow wrote, "Inequality is our era’s gravest economic challenge. When it comes to meeting that challenge, Social Security isn’t a problem; it’s part of the solution."