Ten Reasons the Social Security Proposal of
the Fiscal Commission Co-Chairs Should be DOA 

http://strengthensocialsecurity.org/Dead-On-Arrival

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The Fiscal Commission Co-Chairs’ Social Security
proposals are an equal opportunity disaster. So soon
after an angry electorate has expressed its frustration
with a Washington political class that does not appear
to be listening, it totally ignores the will of the
people. Poll after poll has shown that Democrats,
Republicans, and Independents reject the punitive cuts
in America’s economic security that the co-chairs have
proposed. Their proposal:

1  Deeply cuts the benefits of middle-class families.
   The proposal would cut retirement benefits by as
   much as 36% for young people entering the workforce
   today. Today’s 20-year old workers who retire at age
   65 would see their benefits cut by 17% if their
   wages average $43,000 over their working lives, by
   30% if their wages average $69,000 over their
   working lives, and by 36% if their wages average
   $107,000 over their working lives, according to the
   Social Security Chief Actuary.1 The proposed cuts
   would apply to retirees, disabled workers and their
   families, children who have lost parents, and widows
   and widowers.

2  Closes Social Security’s long-range funding gap
   primarily by cutting already low benefits, rather
   than by raising taxes on those who can most afford
   to pay. Ninety-two percent of Social Security’s
   projected funding gap is closed by cutting promised
   benefits, according to the proposal. The benefit
   formula change eliminates 45% of the projected
   shortfall, raising the retirement age eliminates
   21%, and reducing the COLA eliminates 26%.2 Social
   Security's benefits are already inadequate -- just
   $13,000 a year on average3 -- and should not be cut
   further. Instead, Social Security’s long-range
   funding gap could be closed, as most Americans want,
   by requiring those employees (and their employers)
   who make more than $107,000 a year to pay Social
   Security taxes on all their wages, as the rest of us
   do who earn less.4

3  Raises the retirement age to 69. This is a 13%
   benefit cut on top of the 13% cut already made when
   the retirement age was increased from 65 to 67,
   according to the Social Security Administration.5

4  Raises the early retirement age to 64. Most
   Americans claim Social Security benefits at age 62
   even though the benefits are currently reduced by
   25%, when they do so.6 Millions take early
   retirement because they work in physically demanding
   jobs, have health problems, or can no longer find
   work. Raising the early retirement age will shut
   them out of the system when they are most
   vulnerable, potentially forcing them to seek
   disability benefits or welfare.

5  Discriminates against lower-wage workers by raising
   the retirement age. Over the last quarter century,
   life expectancy of lower-income men increased by one
   year compared to five years for upper-income men.
   Lower-income women have experienced declines in
   longevity.7 Yet, the higher retirement age applies
   to rich and poor, healthy and sick, alike. In
   effect, the proposal says to lower wage workers that
   they must work longer because the rich are living
   longer!

6  Reduces the annual Cost of Living Adjustment (COLA)
   for Social Security beneficiaries. The "chained CPI"
   proposal would reduce benefits by 0.3% a year on
   average.8 This will result in a 3.7% cut in benefits
   after 10 years in retirement beginning at age 65 and
   a 6.5% cut after 20 years, according to the Social
   Security Chief Actuary.9 If anything, the COLA
   should be increased because it does not adequately
   take account of skyrocketing medical costs, which
   hit seniors and people with disabilities hardest.

7  Hurts current retirees, contrary to promises made by
   the Co-Chairs. The change in the COLA calculation
   would begin in 2011 and affect all beneficiaries,
   not just retirees.

8  Breaks faith with our nation’s veterans and service
   members. Social Security benefits are veterans’
   benefits -- 43% of veterans receive Social
   Security.10 Our men and women in uniform (and their
   families) will see their Social Security disability
   benefits cut deeply if they are seriously injured in
   combat. If they die in combat, their survivors’
   benefits will also be cut substantially. And
   veterans’ retirement benefits will be cut
   significantly just like for all other Americans.

9  Harms our grandchildren the most. In the name of
   helping our grandchildren, the proposal cuts their
   benefits the most. The younger a person is the
   deeper the cuts because of the increase in the
   retirement age and the changes in the benefit
   formula.11

10  Breaks Social Security’s promise with hard-working
   Americans. Social Security belongs to the people who
   have worked hard all their lives and contributed to
   the program. It is based on a promise that if you
   pay in then you earn the right to guaranteed
   benefits. The Co-Chairs’ proposal would break that
   promise.

1- Social Security Administration (SSA), letter from
Stephen C. Goss, Chief Actuary, to Fiscal Commission
Staff,
"Fiscal Commission Plan 2a: Tax Light Plan," pp. 4, 5,
November 9, 2010. The wage amounts are in constant 2010
dollars.

2- Co-Chairs’ Proposal, "Restoring Social Security
Solvency," p. 48, Nov. 10, 2010. Available at
http://www.fiscalcommission.gov/sites/fiscalcommission.
gov/files/documents/CoChair_Draft.pdf.

3- Average monthly benefit amounts calculated by
multiplying by twelve from SSA, "Fast Facts & Figures
About
Social Security, 2010, " p. 15. Available at
http://www.socialsecurity.gov/policy/docs/chartbooks/fa
st_facts/2010/fast_facts10.pdf

4- Polling data available at
http://strengthensocialsecurity.org/sites/default/files
/SSSCHighlightsofKeyPollingQuestionsonSocialSecurity.pd
f

5- Social Security Administration, "Effect of Early or
Delayed Retirement on Retirement Benefits," 2010.
Available at
http://www.ssa.gov/OACT/ProgData/ar_drc.html. Each one-
year increase represents a cut of 6% to 7%.

6- Social Security Administration, "Retirement Benefits
by Year of Birth." Available at
http://www.socialsecurity.gov/retire2/agereduction.htm.
The 25% reduction applies to people who claim benefits
at their 62nd birthday when the normal retirement age
is 66. People accepting benefits later in their 62nd
year have
slightly lower reductions.

7- Harry C. Ballantyne, Lawrence Mishel and Monique
Morrissey, "Briefing Paper #273: Social Security and
the
Federal Deficit, Not Cause and Effect," Economic Policy
Institute, August 6, 2010, p. 8. Available at
http://epi.3cdn.net/99133adf653fd78719_qym6b95et.pdf

8- SSA letter to Fiscal Commission Staff, footnote 4,
p. 4.

9- Social Security Administration, letter from Stephen
C. Goss, Chief Actuary, to Rep. Earl Pomeroy, "Table 3.
Indexing Cost of Living Adjustments (COLA) to a Chained
Version of CPI-W," October 18, 2010. Available at
http://waysandmeans.house.gov/media/pdf/111/SSA_Actuary
_BenefitsExample_Letter.pdf
Using this lower COLA would cut benefits by $108
billion over 10 years, according to the Congressional
Budget
Office, "Budget Options: Volume 2," August, 2009, p.
147. Available at
http://www.cbo.gov/ftpdocs/102xx/doc10294/08-06-
BudgetOptions.pdf

10- Social Security Administration, "Military Veterans
Paper Tables Updated CPS 2009," 2009.
11- SSA letter to Fiscal Commission Staff, p. 4.

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