General Discussion
In reply to the discussion: Obama: Dems don't get enough credit for willingness to cut Social Security and Medicare [View all]bornskeptic
(1,330 posts)It does not increase them enough, but claiming it reduces them is nonsense.
No complicated computation is needed to see that is the case.
1. The Bowles-Simpson proposal would increase SS revenue by raising the cap on income subject to SS tax to include 90% of earned income, which would mean almost a 10% increase in SS revenue.
2. Nothing in Bowles-Simpson increases administrative costs.
3. All money which goes into SS that is not spent on administrative costs is eventually paid out in benefits.
4. Therefore, under Bowles-Simpson more is paid out in total benefits, so the average benefit is higher.
You're probably looking at the comparison of actual benefits under Bowles-Simpson with benefits that would be provided under the current schedule of benefits. That's an important comparison to be made, but don't be dishonest about what you are comparing. Under current law benefits will be cut to only the amount payable from current receipts, which will involve something like a 23% cut in benefits, whenever the trust fund is depleted. Nobody can say for sure when that will happen, but it certainly will be before 2050. Page 55 of the Fiscal Commission report compares the result of comparing benefits under the Bowles-Simpson proposal to benefits under current law in 2050.
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf
You can see that benefits for everyone in the lower four income quintiles would be higher under Bowles-Simpson than under the current law, and that those in the lower two quintiles would receive benefits as high or higher than under the current schedule of benefits, compared to the 23% less beneficiaries will see if the law isn't changed. In addition to increasing average benefits, the Bowles-Simpson plan would make Social Security considerably more progressive. It's far from ideal, but it would be a huge improvement on the status quo.