If It Ain't Broke... GOP Senators Propose Harmful Social Security 'Fixes'

April 13, 2011 3:49 pm ET — Kate Conway

This morning on Fox News, a trio of Republican senators proposed a series of nonsensical reforms to Social Security. Indeed, despite all the bluster from the GOP about "entitlement" spending, the way Social Security is set up prohibits it from adding to the deficit whatsoever (which is, in reality, driven primarily by the continuation of the Bush tax cuts).

But Sens. Rand Paul (KY), Mike Lee (UT), and Lindsey Graham (SC) insist that "We've got to fix the system" by raising the retirement age and implementing means testing:

SEN. PAUL: Well the thing is, is Social Security for the first time is now spending more or paying out more than comes in. And it's broken. We've got to fix the system.

SEN. GRAHAM: What we do is continue what Ronald Reagan and Tip O'Neill did in 1983. They went from 65 to 67. We're going to go from 67 to 70 using the same formula, three months a year. It's going to take decades. If you're born in 1970 that's the first group to retire at 70, so you have a long time to plan for it.

SEN. LEE: I think we need to look at the fact that everybody has a stake in this and we have bought off more than we can handle on this issue. So we have to look at the fact that people who are at the top end of the socioeconomic spectrum can stand to sacrifice a little bit in terms of the benefits they receive at the back end. What this enables us to do is to avoid raising taxes at a time when our economy is least able to absorb it.

Watch:

 

Such drastic changes to the system are unnecessary: Social Security funding is not the problem or expense that Sens. Paul, Lee and Graham make it out to be. The program is fully funded through 2037, and thereafter the shortfall is "relatively modest": less than 1 percent of GDP.

The effects of raising the retirement age, however, would not be modest at all, as doing so amounts to a significant across-the-board benefits cut for recipients. Moreover, forcing older workers to stay in the job market until age 70 — or lose part of their benefits if they're unable to do so — would represent an unnecessary hardship for America's lower-income or less-educated seniors.

The senators' second proposal — denying benefits to the wealthy — wouldn't actually save much money because most of Social Security's payouts go to the poor and middle class. As Kevin Drum puts it, "If you make the means testing stringent enough so it applies only to the genuinely well off, it wouldn't hit enough people to matter much." It would, however, turn the universal Social Security benefit into something that looks a lot more like a welfare program, which would surely undermine support for it among the wealthy and powerful no longer receiving a payout.

There are easier, and better, fixes that don't require the entire program to be dismantled; for example, asking high earners to pay a little more on the front end — rather than give up their benefits when they retire — could entirely eliminate the projected funding shortfalls. 

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