The House Republican budget proposal released today by Rep. Paul Ryan (R-WI) largely avoids discussing Social Security, instead calling for President Barack Obama to submit a plan to Congress for a vote. This may seem like a reasonable appeal to bipartisanship—Rep. Ryan even mentions a “bipartisan path forward on Social Security” several times—yet his proposal is really a punt by Republicans to avoid talking about Ryan’s disastrous plan for Social Security that he released as part of his Roadmap for America’s Future last January. What’s more, hidden in plain sight is Rep. Ryan’s plan to reform Social Security solely through benefit cuts.
Let’s first explore what Rep. Ryan definitely doesn’t want to talk about. According to the Congressional Budget Office, Ryan’s Social Security plan presented last year would cut benefits and partially privatize the intergenerational retirement program by diverting money intended to pay for benefits into private accounts. As CBO wrote in a 2010 analysis: “Traditional retirement benefits would be reduced below those scheduled under current law for many workers who are age 55 or younger in 2011.… A system of individual accounts would be established in 2012.”
Largely because of the costs of privatization, Rep. Ryan’s Social Security plan actually worsens the Social Security shortfall. His plan increases the Social Security shortfall all the way until 2060, with government outlays on the program rising from 5.4 percent of GDP in 2020 (just slightly above current path of 5.3 percent) to 6.3 percent of GDP in 2040 (well above the current path of 5.9 percent). Maybe that’s why he isn’t presenting such details in the House Republican budget plan released today.
But what is in that budget plan released today is the clear implication that Social Security should be brought into balance entirely through benefit cuts. Raising the cap above which earnings are not taxed—which today stands at $106,800—seems to be off the table in Rep. Ryan’s plan. He argues that lifting the cap could do “profound economic damage.” He generally has positive things to say about the president’s Fiscal Commission proposal for Social Security reform, but argues that some of its proposals “particularly on the tax side, are of debatable merit.” All of which suggests that Ryan wants to bring Social Security into balance, solely through benefit cuts.
In short, it looks like Republicans are once again trying to cut Social Security benefits.
David Madland is Director of the American Worker Project at the Center for American Progress, and Christian E. Weller is a Senior Fellow at the Center.