by Bruce Webb
The above though not yet widely released is a from a public document produced by the Social Security Office of the Chief Actuary. It shows the final results of the Simpson-Bowles Social Security proposal as percentage of benefits payable to various income levels compared to ‘scheduled’ and ‘payable’ benefits. Under current projections ‘payable’ benefits after Trust Fund Depletion will have to be reduced by 22% initially and 25% ultimately. On the other hand ‘scheduled’ benefits are payable in full up to the point of Depletion. So any payout less than 100% in the ‘scheduled’ column between now and 2037 is a loss compared to the status quo as is any payout less than 78% in 2037 or 75% in 2080.
Coberly and I (and some others) have been warning for years about the dangers of turning Social Security from an insurance program with mild progressive transfers to a welfare system. Well this is a pure illustration of that, I can’t imagine any scheme designed to more undermine support for Social Security than one that calls for earners in the top 50% taking a cut even from the projected cut. The answer to a ‘crisis’ defined as an ultimate 25% cut in scheduled benefit is for upper income folk to take a 35-41% cut? All in an effort to save them a phased in 0.1% of payroll per year increase over the next 20 years?
(In passing note that despite promises to hold current retirees harmless changes in (mostly) COLA result in cuts compared to the 2030 baseline of between 5% for medium earners to 12% for maximum earners.)