July 04, 2010
In an interview with the Pittsburgh Tribune-Review laat week, House Minority Leader John Boehner called for cutting Social Security benefits to pay for the war in Afghanistan. Somehow, this comment passed largely unnoticed in the media, including a Washington Post column that discussed the interview.
The column complained that Boehner, “offered few concrete thoughts about the GOP agenda.” It later went on to say:
“Nor did he seem eager to tip his hand on the terms of entitlement reform. In his interview with the Tribune-Review, Boehner volunteered that the Social Security retirement age might need to be raised to 70 for younger workers but he would go no further.”
Boehner’s suggested increase in the retirement age would be roughly equivalent to a 15 percent cut in benefits when it is fully phased in. Since most retirees are primarily dependent on their Social Security benefits for income, this would be comparable in many cases to a 15 percentage point increase in their income taxes. Furthermore, this cut will begin to hit near retirees soon, since it is a phased increase of three years in the retirement age that will be completed in 22 years.
One might think that this sort of cut to the nation’s most important social program would be big news, but apparently it did not go far enough for the Washington Post. Of course Boehner actually did suggest further cuts in his interview. He also proposed (in a somewhat mangled form) to have initial benefits indexed to prices rather than wages. This implies reducing scheduled benefits by approximately 1.0 percent a year. Under this formula, after 10 years retirees will get 10 percent less than is provided under current law and after 20 years they would get approximately 20 percent less. (Compounding reduces the impact slightly.) While the full cut would only apply to workers at the maximum wage (@$106,000 at present), workers earning $70,000 a year would see cuts that are close to half this size.
In short, Mr. Boehner has proposed very large cuts to the country’s most important social program, to pay for an unpopular war (the Congressional Budget Office projects that the trust fund will be fully solvent until 2043, so the cuts are not needed to keep SS itself solvent), and the Post dismisses his comments by saying that “he offered few concrete thoughts on the GOP agenda.” It is difficult to imagine what Mr. Boehner would have to say to get the Post to take his proposals seriously.
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