Strategery! Part II

July 14th, 2010at 11:22am Posted by Eli

CEPR calculates the costs and benefits of cutting Social Security:

  • The most frequently suggested [progressive price indexation] formula would imply cuts in benefits of 6.2 percent for a household in the in the middle income quintile between the ages of 45-49 in 2007 and 9.6 percent for a household in the middle quintile between the ages of 40 and 44 in 2007
  • Raising the normal retirement age 70 in 2036 would result in a 4.0 percent reduction in benefits for workers between the ages of 50 and 54 in 2007 and a 10.0 percent reduction for workers between the ages of 40-44
  • Reducing the COLA by 1.0 percent would result in a benefits cut of 12 percent for a retiree at age 75 and more than 20 percent at age 85
  • For retirees in the bottom income quintile at age 85 who were between the ages of 55 and 59 in 2007, reducing the COLA by 1.0 percent implies a 14.6 percent reduction in income and a cut of 16. 5 percent for retirees in the bottom quintile at age 85 between the ages of 40-44.

And how do these massive cuts impact the national debt?  Using CEPR’s Deficit Calculator, it looks it would cut the national debt by $861 billion (about 3.5%) over the next ten years, which if I recall correctly is considerably less the cost of Dubya’s massive tax cuts for the rich.  (Note: Simply raising the cap on the Social Security taxable wages to $180,000 would cut the debt by $877 billion all by itself)

So even ignoring the immorality of defaulting on the bonds Social Security has purchased to fund itself, it looks like Obama’s handpicked, Pete Peterson-funded commission of Social Security-hating deficit hawks is probably going to recommend some very painful – and unpopular – cuts that do very little to solve the supposedly urgent budget problem at hand.

Entry Filed under: Obama,Politics,Social Security,Wankers


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