After the federal government issued the record $2 trillion coronavirus relief bill in March, many Republicans are against additional spending and are flirting with cutting Social Security benefits to pay for relief payments to Americans, Los Angeles Times columnist Michael Hiltzik reported.
The proposal would have Americans borrow from their future benefits in order to remain financially sound during the pandemic.
- The suggestion was made by Andrew Biggs of the American Enterprise Institute and Joshua Rauh of the Hoover Institute at Stanford University. Biggs and Rauh calculated that a "$5,000 loan would require a maximum deferral of just under five months" for a very low-income worker taking the loan at age 60.
- The deferral time would be shorter for higher-income and younger workers.
However, Hiltzik pointed out that according to Biggs and Rauh’s plan, the burden would be greater on Americans with the lowest incomes.
- For a worker earning maximum Social Security covered income, which is currently $137,700, at age 25 he or she could take out a $5,000 loan and defer benefits upon retirement for less than a month.
- In the Biggs and Rauh plan, a 1.6 percent interest is charged annually from when the loan was taken to retirement. A worker who borrows at age 25 could end up owing twice the borrowed amount at retirement.
Supporters of Social Security benefits have voiced their criticism of the proposal.
“These ideas represent a gross misuse of Social Security for purposes unrelated to its core purpose: providing baseline retirement security for American workers,” asserts the National Committee to Preserve Social Security and Medicare.
Alex Lawson, executive director of the advocacy group Social Security Works also agreed that proposals for cutting Social Security benefits do not take into account that the program is not only a retirement plan, but also a social insurance program.
“Social Security is an earned insurance benefit. It is not a piggy bank.”
Hiltzik noted that Republicans currently wringing their hands over the impact pandemic relief measures will have on the national debt were curiously silent as their own 2017 tax cuts — which primarily benefited corporations and the wealthy — were projected to add $1.5 trillion to the national debt over a decade.
But the recipients weren't asked to give up their Social Security benefits, or really to sacrifice anything, in return for the government's largesse.
And now, incredibly, Republicans are crying poverty on behalf of a federal government that they systematically impoverished. As happens almost invariably, they're planning to take the costs out of the hides of the neediest.