After leaving major decisions on Social Security and Medicare cuts to the New Year, Members of Congress are returning to pick up their debate over entitlements and taxes. With the looming insolvency of the Social Security disability program just two short years away, Congress will be forced to take action to re-set program funding at some point soon. When that happens, cost-of-living adjustment (COLA) cuts could be used to shore up the program.
TSCL's members and supporters are sending in thousands of petition signatures to fight the cuts that threaten senior benefits. Senior voter outcry, especially in an election year, is a highly effective means to make lawmakers wary of making major changes.
But lower COLAs and changes that would increase seniors' Medicare costs still remain key targets of plans to lower federal spending. Late last year, the budget conference committee responsible for heading off another government shutdown heard deficit reduction options from the Congressional Budget Office (CBO). Among those having the biggest impact on reducing government spending are proposals to increase deductibles and co-insurance for Medicare — cutting federal spending about $114 billion. In addition, moving to using the more slowly-growing chained CPI to determine COLAs would cut government spending by an estimated $138.5 billion on Social Security and other federal benefit programs, like military retirement, through 2023.
But bigger deficit reduction would be possible if Social Security taxes were made more equitable. Under current law, high-income earners — people with earnings higher than Social Security's taxable maximum of $117,000— pay nothing on earnings over that amount. In other words, someone earning $1,117,000 pays no Social Security taxes on the one million above $117,000. Yet workers earning less than $117,000 pay Social Security taxes on every dime of their wages. The CBO estimates that simply raising the taxable maximum to $177,500 would bring in $460 billion in new Social Security revenues through 2023. Taxing all earnings would eliminate up to 90 percent of Social Security's funding problems.
TSCL supports legislation that would raise the taxable maximum. "TSCL believes that cutting Social Security benefits can't be justified when moderate payroll tax adjustments can keep the system solvent for decades," says TSCL Executive Director Shannon Benton. "Requiring everyone to pay their full share would add years of solvency to the Social Security," Benton says.
What do you think? Take TSCL's 2014 Senior Survey.
Sources: Options For Reducing The Deficit: 2014 to 2023, Congressional Budget Office, November 2013.