Key GOP congressman proposes significant Social Security reforms

Texas congressman Sam Johnson, chairman of the Social Security subcommittee, has proposed a series of reforms that will at least partially alleviate the funding problem facing the program, which will run out of money by 2034.

Of the many changes proposed is a recalculation of the inflation index that will reduce or eliminate cost-of-living increases for wealthy recipients while increasing benefits for the poor.  Significantly, the package does not include any tax increases.

Washington Examiner:

The bill put forward by Texas' Sam Johnson, the chairman of the subcommittee on Social Security, would reduce costs by changing the benefits formula to reduce payments progressively for high earners. It would also gradually raise the full retirement age from 67 to 69 for people who are today 49 or younger. Lastly, it would change the inflation metric used to calculate benefits to one that shows lower inflation, essentially slowing the growth in benefits, and eliminate cost of living adjustments for high earners.

On the flipside, it would increase benefits for lower-income workers, and raise the minimum benefit for low-earners who worked full careers.

Johnson called the plan the "start of a fact-based conversation" on how to fix Social Security's finances.

Social Security's trust funds for retirement and disability payments are projected to run out by 2034 if Congress doesn't take action. At that point, beneficiaries would see an immediate cut in benefits of about a fifth.

Johnson's is one version of reform to stave off that possibility. This summer, a bipartisan group of lawmakers also put forward legislation that would improve Social Security's finances in part by raising payroll taxes.

President-elect Trump has suggested that he wants to crack down on waste and fraud in Social Security, but isn't interested in a broad overhaul of the retirement program.

Congressional Democrats, meanwhile, have moved to the left on Social Security, with key lawmakers favoring an increase in benefits for some groups, rather than any reductions.

With Trump not necessarily enthusiastic about significant reform, the proposals don't have much of a chance.  Only a president 100% committed to the project, willing to expend his political capital, can expect to have any success at all.

But 2018 is an election year, making it extremely unlikely that politicians from either side will want to touch "the third rail of American politics." 

Trump may want to avoid the controversy entirely during his first term, leaving the issue to germinate until/if he is re-elected in 2020.  He's got a full plate already of significant issues that need to be addressed, and there is very little upside to adding Social Security to the mix.

Texas congressman Sam Johnson, chairman of the Social Security subcommittee, has proposed a series of reforms that will at least partially alleviate the funding problem facing the program, which will run out of money by 2034.

Of the many changes proposed is a recalculation of the inflation index that will reduce or eliminate cost-of-living increases for wealthy recipients while increasing benefits for the poor.  Significantly, the package does not include any tax increases.

Washington Examiner:

The bill put forward by Texas' Sam Johnson, the chairman of the subcommittee on Social Security, would reduce costs by changing the benefits formula to reduce payments progressively for high earners. It would also gradually raise the full retirement age from 67 to 69 for people who are today 49 or younger. Lastly, it would change the inflation metric used to calculate benefits to one that shows lower inflation, essentially slowing the growth in benefits, and eliminate cost of living adjustments for high earners.

On the flipside, it would increase benefits for lower-income workers, and raise the minimum benefit for low-earners who worked full careers.

Johnson called the plan the "start of a fact-based conversation" on how to fix Social Security's finances.

Social Security's trust funds for retirement and disability payments are projected to run out by 2034 if Congress doesn't take action. At that point, beneficiaries would see an immediate cut in benefits of about a fifth.

Johnson's is one version of reform to stave off that possibility. This summer, a bipartisan group of lawmakers also put forward legislation that would improve Social Security's finances in part by raising payroll taxes.

President-elect Trump has suggested that he wants to crack down on waste and fraud in Social Security, but isn't interested in a broad overhaul of the retirement program.

Congressional Democrats, meanwhile, have moved to the left on Social Security, with key lawmakers favoring an increase in benefits for some groups, rather than any reductions.

With Trump not necessarily enthusiastic about significant reform, the proposals don't have much of a chance.  Only a president 100% committed to the project, willing to expend his political capital, can expect to have any success at all.

But 2018 is an election year, making it extremely unlikely that politicians from either side will want to touch "the third rail of American politics." 

Trump may want to avoid the controversy entirely during his first term, leaving the issue to germinate until/if he is re-elected in 2020.  He's got a full plate already of significant issues that need to be addressed, and there is very little upside to adding Social Security to the mix.

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