Failing badly in its efforts to sell its privatization and benefit cuts plan directly, the White House is now trying an approach where down is up, benefit cuts turn into benefit growth, and trillions of dollars just disappear.
Four Key Points to Keep in Mind:
1. Bush is Making a Misleading, Apples to Oranges Comparison to Make his Benefit Cuts Seem Like a Good Deal for Middle-Class Workers.
The White House compares President Bush’s middle-class benefit cuts to much larger, hypothetical cuts that would be necessary if nothing is done to shore up Social Security. However, President Bush’s cuts would amount to only 57 percent of those hypothetical cuts in 2041 to address the entire 75-year shortfall. This is an apples and oranges comparison that leaves a $1.7 trillion gap between the amount President Bush would save through benefit cuts and the actual shortfall.
2.) New Bush Argument Undercut by Own Social Security Administration’s Promise to Taxpayers.
Bush’s efforts to change the rules of the game fly in the face of his own Administration’s promise to taxpayers. For the past four years, Bush’s Social Security Administration has sent individual taxpayers an annual statement informing them of what their benefits will be when they retire. Now he is trying to move the goal posts mid-game to make his plan’s cuts seem less draconian.
An honest Social Security reform debate would show how each proposal compares to the benefits already promised by the federal government and not some hypothetical scenario of massive benefit cuts that are neither proposed nor enacted legislatively.
3.) President Bush Needs to Explain Who Will Bear the Burden For Nearly $2 Trillion in Benefit Cuts He Does Not Account For.
To restore solvency solely with benefit cuts as President Bush has proposed, all benefits will have to be cut by a total of $4 trillion. However, the Bush benefit cuts add up to $1.7 trillion less than needed.*
To honestly identify who the “winners” are under President Bush’s plan, he must explain who will carry the burden of the remaining $1.7 trillion in additional benefit cuts he does not account for.
4) In Reality, Bush’s Plan Means Massive Benefit Cuts for the Middle Class.
President Bush has proposed to reduce benefits compared to what workers are scheduled to get from Social Security starting in 2012. These benefit cuts would increase from year to year. A worker earning $58,560 in 2005 and retiring in 2045 would see a 25 percent cut. A worker earning $36,600 in 2005 and retiring in 2045 would see a 16 percent cut.
Bush’s middle-class benefit cuts will grow dramatically over time. A worker making $36,600 in 2005 and retiring in 2075 would see a 28 percent cut. A worker who earns $58,560 who retires in 2075 will see a 42 percent cut.
These cuts will affect the vast majority (70 percent) of wage earners. Everybody earning $20,000 or more in 2005 would see a benefit cut.
* (President Bush is modeling his benefit cuts on Robert Pozen’s plan which, including disability benefit cuts, adds up to $1.1 trillion less than is needed. President Bush has indicated he will protect disability benefits, thereby decreasing the amount of solvency the remaining benefit cuts address.)
For more on information read our Social Security fact sheet, or visit our Social Security homepage.