What Social Security Cuts?

social-security

As part of the “fiscal cliff” negotiations, it’s been proposed that Social Security benefits be “cut.” At least, that’s the word being used by Social Security supporters such as the AARP. But what’s being debated is a reduction in the rate of growth of benefits.

So, nothing is being cut, the benefits just won’t go up as quickly because the government would be calculating inflation differently. And even the “cut” in the rate of growth of benefits is pretty tiny, amounting to about $2/month for most beneficiaries:

The average retired worker on Social Security received $1,240 a month in 2012. The scheduled 1.7% COLA for 2013 will increase this average monthly benefit to $1,261, or a $21 increase per month. If the COLA was instead based on the chained CPI , the 1.5 % increase would bring the average monthly benefit up to $1,259, a $19 increase in monthly benefits and only $2 less per month than based on the current CPI.

Meanwhile, according to the AARP, this cut “is neither fair nor warranted.”

The nation is over $16 trillion, closing in on $17 trillion, and running an annual budget deficit of over $1 trillion annually. And Social Security is adding to that deficit. The program is in deficit, obligated to pay more in benefits than it receives in revenue, and when since the program’s trust fund was replaced long ago by US Treasury Bonds, every time Social Security dips into that fund to pay benefits the Treasury must make good on the bonds. Which, in turn, adds to the national debt.

But the AARP won’t even accept a reform to the program that amounts to a less than $2/month reduction in the rate of growth of benefits.

Maybe it’s time to stop listening to the AARP on these issues.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • WOOF

    Earlier this year AARP was agreeable to cuts to Soc Security.
    Their membership quickly straightened them out.
    Which politicians will put their hands on the third rail ?

    • http://sayanythingblog.com Rob

      Meanwhile, math shows us that entitlement programs like Social Security and Medicare are bankrupting this country.

  • sbark

    A big problem with SS always overlooked is the amount of return recipients have received. The following data is from Stansbury research.

    using average figures for a couple retired in 1960, their total Social Security and Medicare taxes paid in were 18,000.00 (in constant, 2011 dollars). Total benefits received were $248,000 – a return of 1,277%. By 1980, those amounts were $104,000 contributed and $512,000 in benefits, a return of 378%. And by 2010, the returns had fallen considerably – now $352,000 in contributions were worth only $798,000 in benefits, a 226% return, but still way above SS survival levels remotely possible, unless those taxes are to raised substantially to keep the ponzi scheme going.

    We’ve all seen the email floating in cyberspace demanding a 5% return on what people have paid into SS, when in reality its been over 200% return for decades.

    This is a result of 40 some SS “pay raises” over the last few decades……based on inflation…..its become a total retirement program, when it was just intended to be a retirement supplement. Very few boomers nearing retirement have any amount of savings built up……and are not being helped by Obama’nomics

    The SS system was never meant or able to survive while paying out those kind of returns. Especially now, as the IOU’s in the SS lockbox are getting paid 1% or less, while needed at minimum 8%

    • JJ

      And God forbid we allow the citizens to control their own retirement accounts that just might get this type of return and really belong to them when they retire.

      • sbark

        that would go against a basic democrat Liberal premise——–that the average citizen is not smart enough to manage most of his own affairs—–
        Its a ruling class elite thing…..managing a herd of lvsk

        its all just part of the pacification process……just hurry up and be pacified

    • WOOF

      Stansbury research

      “Investment Research Firm Agrees to Pay Civil Monetary Penalty to Settle Alleged Violation of Social Security Act”

      • sbark

        Data shows every professional american now committs on ave. 3 felonies per year……there are now so many laws and reg’s that nobody can possibly follow them.

        Say…..did Tim Geithner ever pay the fines for his delinquent taxs?…..How about Tom Dashle?….how bout half the DC bueracrats?

      • Bat One

        Typical liberal response: Can’t argue the facts, so attack the credibility of your opponent. Tell me, WOOF, got anything substantive to refute Stansbury’s figure?

        • WOOF

          Stansbury is a stock touting, get rich newsletter subscription seller convicted of financial fraud.

          Lets go for simple facts that are self evident “average figures for a couple retired in 1960,” 65 yr old retirees were born in 1895, Soc Sec is enacted 1935. Got salt ?

          • Bat One

            OMG! Have they no shame! The Stansbury cited figures differ from your unattributed source (and presumably inflation adjusted) figures by a total of $400 in total taxes paid in and $6000 in total lifetime benefits. The Horror! A difference easily accounted for by either inflation adjustment differential or the month in which the couple started to draw benefits.

            Still, it is good of you to have posted your chart If nothing else it certainly demonstrates, Democrat howling and braying not withstanding, that neither Social Security nor Medicare can continue funding such an exorbitant overall level of benefits when the stream of tax revenues keeps diminishing. Y’all should have listened to George W. Bush seven years ago.

  • Roy_Bean

    When socialist insecurity started you had to basically reach your life expentancy before you could retire. What needs to happen now, right after the new congress takes over, is to raise the SS ages to at least 65/70 from 62/66. That needs to happen asap in 2013.

  • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

    Blind Squirrel Nutz – Ronnie Raygun edition on Social Security
    Ronald Reagan: “Social Security has nothing to do with the deficit.”

    http://www.youtube.com/watch?v=ihUoRD4pYzI

    • http://sayanythingblog.com Rob

      Well, yeah, in the 1980’s Social Security wasn’t adding to the deficit. But then, in the 1980’s the program wasn’t in deficit.

      Remember back during the first debt ceiling show down and President Obama said that if we didn’t raise the debt ceiling we couldn’t send out SS checks? Why do you think it was he said that?

      Maybe because SS is in deficit and relying on a trust fund that, in turn, relies on the Treasury to make good on the bonds that make up 100% of the trust fund which, in turn, adds to the budget deficit?

      Sorry, Boob, but the math isn’t on your side.

      • Bat One

        Rob, You’re talking over his head. Common sense and arithmetic aren’t his strong points.

  • Bat One

    When George W. Bush tried to start a conversation with Democrats about repairing the Social Security system as he had promised to do during his campaigns, liberals, led by an idiot senator from North Dakota refused to even show up. Its now 7 years later, the system is further in deficit, and as almost any fool can see, the longer we wait to actually solve the underlying problem the more drastic the solution will be.

    For decades Democrats have been demonizing anyone with the temerity to point out that Social Security is flawed and cannot survive as currently structured… in essence buying votes with our children’s money that hasn’t yet been earned. Shameful and dishonest. As for AARP, they are nothing more than a liberal marketing device for over-priced insurance policies sold to the unsuspecting.

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