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Here’s a First Draft of the GOP’s Plan to Overhaul Social Security

Eric Pianin
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A senior Republican House chairman has begun circulating a proposal that would make major cuts and changes to the Social Security system in the coming decades, a move to contravene in President-elect Donald Trump’s repeated vow to leave the retirement program for 61 million retirees and their families unscathed.

The comprehensive proposal -- already generating Democratic outrage – would put in place a series of highly controversial measures long debated by the two parties.

Related: A New Plan to Save Social Security for Another 75 Years

Those measures include gradually raising the retirement age for receiving full benefits from 67 to 69 and adopting a less generous cost of living index than the current one. The proposal would also inaugurate means testing by changing the benefits formula to reduce payments to wealthier retirees. It would also eliminate the annual COLA adjustments for wealthier individuals and their families.

The plan – drafted by veteran Rep. Sam Johnson (R-TX), chair of the House Ways and Means subcommittee on Social Security -- includes some measures that might attract Democratic interest. One would increase retirement benefits for lower-income workers and another would increase the minimum benefit for low-income earners who worked full careers.

However, Johnson’s call late last week for the start of a “fact-based conversation” about ways to fix Social Security and assure its long-term solvency drew immediate fire from House Democratic Leader Nancy Pelosi of California, who warned that Johnson’s approach, if adopted, would cut current benefits by a third or more.

“Slashing Social Security and ending Medicare are absolutely not what the American people voted for in November,” Pelosi said in a statement. “Democrats will not stand by while Republicans dismantle the promise of a healthy and dignified retirement for working people in America.”

Related: How the Democratic and GOP Platforms Clash Over Social Security Reform

Johnson’s proposal, formally introduced as a bill last Thursday, is little more than an opening bid in a much larger conversation about entitlement reform in the coming year. However, the announcement was jarring to many Democrats coming on the heels of the Republicans vow to move swiftly next month to repeal the Affordable Care Act but without a replacement plan in hand.

House Speaker Paul Ryan (R-WI) and House Budget Committee Chair Tom Price (R-GA), who was tapped by Trump as the next secretary of health and human service, have also signaled interest in pursuing major changes to Medicare and Medicaid, the two federal health programs for seniors and low-income families.

While many fiscal conservatives and deficit hawks may applaud the Republicans coming to terms with major entitlement programs that will contribute to the long-term debt, Democratic critics see the emerging GOP plans as a frontal assault on the nation’s social safety net.

The Social Security trust fund -- which spends about $918 billion a year in benefits to retirees and their families, as well as disabled workers – is not in any imminent danger. However, the Trustees Report in March warned that the fund will begin running out of money in 2034 when beneficiaries will begin to face a 21 percent benefit cut.

Trump told supporters during the campaign that it wouldn’t be fair to Americans to cut Social Security or Medicare when so many of them have paid into the system for years. He seemingly ruled out any far-ranging overhaul of the retirement program, other than to crack down on “waste, fraud and abuse.”

Democrats including presidential nominee Hillary Clinton and Sen. Bernie Sander of Vermont, meanwhile, advocated changes in the law that would greatly expand retirement benefits, especially for widows and others struggling to make ends meet, by raising the cap on the federal payroll tax that goes to fund Social Security.

Related: Medicare and Social Security Worse than They Look

Late last week, Rep. Tom Cole of Oklahoma, an influential House Republican, and Rep. John Delaney of Maryland, a moderate Democrat, renewed their support for a plan to create a bipartisan, 13-member panel to recommend to Congress ways to prevent the massive trust fund from running out of money and extending its solvency for another 75 years.

The new commission would operate along the lines of one created 35 years ago, early in the Reagan administration, that helped pave the way for congressional agreement that extended the life of the New Deal era retirement program by a half century.

But tampering with the highly popular Social Security system is highly risky, as politicians including former Republican president George W. Bush ruefully learned in the past. And any serious proposals, such as raising the retirement age, increasing federal payroll tax revenues or altering the cost of living adjustments to save money invariably triggers strong opposition from the AARP, progressive activists and Democratic lawmakers.

However, Johnson contends that his plan, the Social Security Reform Act would put Social Security “back on a sustainable path” by modernizing the program, adequately rewarding retirees and the disabled for their years of work, and improving retirement security. Johnson’s proposal was first reported by The Washington Examiner.

Social Security was created in 1935 to help provide an economic safety net for retirees in the midst of the Great Depression. Throughout the years, Social Security was gradually expanded to help those who are unable to work due to a disability or who experienced a death of the primary wage earner in the family. Nearly 60 million Americans in all benefit from the program financed by a payroll tax.

Related: GOP Cuts in Medicare May Be Next After Dismantling Obamacare

“For years I've talked about the need to fix Social Security so that our children and grandchildren can count on it to be there for them just like it’s there for today’s seniors and individuals with disabilities,” Johnson said in a statement. “My common-sense plan is the start of a fact-based conversation about how we do just that.” 

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