By the time Donald Trump is sworn in as president, tens of thousands of Americans will already have stopped paying into Social Security for the entire year.
Those lucky few earn at least $2.1 million a year — a level roughly 100,000 tax filers reached in 2014, according to the IRS. They owe their yearlong retirement tax holiday to a rule capping the amount of annual income that is subject to payroll taxes. With wealth inequality’s explosion over the last four decades, a huge portion of the money generated by workers’ sweat is now escaping the retirement system.
A higher cap — or eliminating the cap entirely — would make Social Security fiscally secure until nearly the end of this century and ensure that the system can provide the same modest, vital support to retirees’ dignity that it does today.
Republicans would rather destroy the program entirely. A new GOP plan would throw the system in a blender, pour the resulting mush onto the countertop, and declare victory.
“It definitely doesn’t hold anyone harmless. People over 55, their benefits are getting cut too. The reality is that it is a massive cut to basically everybody, especially the middle class,” Social Security Works’ Alex Lawson told ThinkProgress. “This will push millions of older people into poverty.”
The proposal, from House Social Security Subcommittee Chairman Sam Johnson (R-TX), rips up the government’s current commitment to retiree dignity. It would slash benefits by as much as half for some workers over the coming decades, and by close to 20 percent for even the poorest workers in their dotage. On top of relying entirely on benefit cuts, the plan exempts benefits for wealthy retirees from taxation in order to further sabotage funding down the line.
On paper, the plan also bumps benefits up for the poorest workers — those whose lifetime average annual income is under $23,000 — but even that is a sham according to Social Security Works’ Nancy Altman. Someone earning little enough to qualify would still see smaller benefits than under current law — as much as a 20 percent cut.
A worker who averaged $60,000 in annual income, better than the national median but hardly making a killing, would lose fully one third of the retirement benefits they’re due from the system today. And the Republican plan would change how benefit increases are calculated to keep up with inflation, putting retiree incomes on a perpetual starvation diet.
This isn’t reform. It’s annihilation. Social Security is an insurance program in which workers own their future benefits by virtue of their working-years payments. The Johnson plan ends that simple give-and-take.
“Once you earn it, it’s yours. You don’t have to prove anything. There’s no means testing, there’s no asset testing, none of that, you’ve paid the premiums, you’ve earned it,” he said. The Republican plan would mean “families facing very difficult circumstances would also face a weight of paperwork to get the benefits they’ve earned. That’s fundamentally destroying what makes a social insurance program a social insurance program.”
“They’ve changed it from a social insurance program which returns 99 cents on every dollar in the form of benefits, into this very weird regressive tax structure that hits the middle class the hardest and does not return the money in the form of benefits,” Lawson said. “It’s a symphonically destructive thing.”
Currently, the system’s 39 million retired workers draw average benefits of less than $16,000 per year. Social Security is already far from sufficient to assure a dignified retirement — and with the traditional worker pension now as rare and endangered as African rhinos, almost everyone who retires is already heavily reliant on the vicissitudes of the financial markets for their late-life economic stability.
The stability of government benefits for retirees serves as a key check on that market dependency, a short but sturdy leg in the stool. Johnson and the Republicans would grind it to sawdust. The plan cuts benefits for caretakers who spend some of their working years looking after family members, Altman notes, and shrinks them for families with disabled workers.
It’s a bolder gambit than the party’s last concerted effort to dismantle Social Security, the failed privatization push of 2005. In that simpler time, then President Bush and other GOP leaders campaigned around the country for a proposal to move retirement benefits into Wall Street’s hands directly. It was hugely unpopular and likely helped the party lose control of the House in 2006.
Ten years later, Johnson’s plan shows an evolution in thinking. Rather than offering a different way of leveraging Social Security’s pool of resources on behalf of working Americans, Lawson said, they’re just trying to drain it.
“The Republicans learned from the Bush fiasco on privatization and so they’re not going that route. They learned it’s just as effective and it makes their paymasters on Wall Street just as much money if they destroy social security,” he said. “Just crack the foundation and let all the water run out.”
The result is the same — “it ‘fixes’ Social Security in the same sense that one ‘fixes’ a cat,” as the LA Times’ Michael Hiltzik puts it — but the politics are vastly different. Trump’s distracting antics will likely give legislative Republicans extra cover to pursue these kinds of machinations.
Trump explicitly said he wouldn’t cut Social Security if elected. “I’m not going to cut it, and I’m not going to raise ages, and I’m not going to do all of the things that they want to do. But they want to really cut it, and they want to cut it very substantially, the Republicans, and I’m not going to do that,” he told a Wisconsin radio station during the primary.
But Trump’s hardly accountable to his own words. And the next president’s habit of upsetting the traditional order of U.S. politics could easily unplug the “third rail” politics that have traditionally protected Social Security. “It is eerily possible to imagine Republicans pulling off the most regressive social reforms in modern history under a cloak of darkness,” as The New Republic’s Brian Beutler notes.