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Belafon12/09/2016 11:47:16 am PST

Here’s more detail from Josh Marshall’s about Republican Social Security Changes:

We’ll have a story coming shortly on what I just mentioned a short time ago: that Republicans are now planning to pass major cuts to Social Security this year.

Until then let me cover the broad details of the plan.

Unlike the Bush-era plan to partially phase out Social Security and replace it with private investment accounts, this plan takes a different approach. Through a variety of mechanisms, this plan simply cuts benefits and introduces means testing. To look at specific cuts, changes in eligibility and so forth look at pages 2 and 3 on this official Social Security Administration scoring document analyzing the plan. The benefit cuts appear to hit everyone but are weighted toward more affluent recipients.

The big picture is that the current Social Security Trust Fund is predicted to be exhausted in the mid-late 2030s. So roughly in 20 years. People often refer to this as ‘bankruptcy’. But that’s not really accurate. At that point Social Security would only be able to pay 79% of benefits recipients will be entitled to in those years.

By 2090, that percentage falls to 74%. So it’s fairly stable after that drop-off in the 2030s.

Now there are a number of ways to cover that shortfall - the most obvious is to remove or alter the so-called ‘cap’ on Social Security taxes. Once you get over $118,500 of income per year you stop paying Social Security taxes. So your Social Security tax rate is much higher if you make $50,000 a year than if you make $500,000 a year. Change that and most of the problem disappears.

The plan with this new GOP bill is to proactively solve this problem entirely with cuts and really big cuts. Out over 75 years, the GOP proposal has the Trust Fund growing substantially out into the infinite horizon. In other words, a lot of the cuts are more than are necessary to pay for all benefits.