We issued a major analysis today of the November 10 proposal by the co-chairs of President Obama’s fiscal commission, former Clinton White House Chief of Staff Erskine Bowles and former Republican Senator Alan Simpson.
BEYOND THE NUMBERS
Thanks to a new analysis by Social Security’s chief actuary of several possible changes to the program — which the House Subcommittee on Social Security released today — we can calculate the size of the Social Security benefit reductions that Rep. Paul Ryan’s much-discussed budget plan would generate (I analyzed the Ryan plan as a whole earlier this year. Here’s my new analysis of the plan’s Social Security component.)
Tomorrow, new figures from the Labor Department are expected to confirm that for the second year in a row, Social Security recipients will receive no cost-of-living adjustment (COLA) in January. Nevertheless, people who have been receiving Social Security for a few years are still ahead of the inflation game. Here’s why:
Several thousand impoverished elderly or disabled refugees who fled persecution in such troubled places as Afghanistan, Somalia, the former Yugoslavia, and Cuba lost their badly needed Supplemental Security Income (SSI) benefits last week. Thousands more will lose their SSI eligibility over the coming year. A last-minute push in Congress to preserve these modest benefits failed before lawmakers left town to campaign for re-election; restoring those benefits should be high on lawmakers’ to-do list when they return to work in mid-November.
Bill Galston of the Brookings Institution and Maya MacGuineas of the New America Foundation offered a plan last week to reduce federal deficits and push down debt held by the public to 60 percent of gross domestic product by 2020. The plan explicitly recognizes that it would be unrealistic to hold federal revenues and outlays to the averages of recent decades, a topic on which we’ve recently written. We commend Galston and MacGuineas for proposing reasonably specific tax increases and spending cuts rather than relying largely on mechanical formulas that avoid making the hard choices.
The Atlantic’s Megan McArdle has written another post about our comparison over the next 75 years of the Social Security shortfall and the cost of the Bush-era tax cuts for high-income taxpayers. The gist of Ms. McArdle’s argument seems to be that we’re not computing the present value of these two policies in the same way. That’s simply incorrect.
Kathy Ruffing and I recently noted that the cost of extending the Bush-era tax cuts for upper-income taxpayers roughly equals the amount of Social Security’s 75-year shortfall. Today at The Atlantic, Megan McArdle questions both our estimate and our analysis. Here’s why our comparison makes sense.
To correct some recent stories suggesting that Social Security faces deep and immediate financial problems, a new report from our colleague Kathy Ruffing outlines the program’s outlook over the short and long term. Here’s the summary: