Republican proposals to cut taxes for the wealthy and undermine Social Security and Medicare have come back like a bad dream with the GOP takeover of the House and the debt ceiling standoff. We spoke to our senior legislative representative, Maria Freese, about what these proposals would really do — and who they benefit. Hint: the answer is NOT working people and retirees.
Q: The debt ceiling standoff and the GOP takeover of the House seem to have brought back some really bad ideas.
A: That’s true. Suddenly we’re hearing about the Balanced Budget Amendment and the Fair Tax Act, along with other proposals that would undermine Social Security and Medicare, like the TRUST Act.
Q: The TRUST Act would allow lawmakers to enact cuts to seniors’ earned benefits without really getting their fingerprints on it. But how would, say, the Fair Tax Act affect these programs?
A: The Fair Tax Act replaces all federal taxes with a national sales tax. Not only is that extremely regressive, because it would hit lower income people the hardest, but it would eliminate the payroll taxes that fund Social Security and Medicare. This means all current retirees would be forced to pay for their benefits twice – once through the payroll taxes they already paid through their working lives and again every time they buy a loaf of bread or pay for a prescription.
Q: Republicans in Congress like to talk about “saving” Social Security and Medicare, which do face significant funding challenges. But their solutions always seem to involve benefit cuts.
A: Absolutely. They want seniors themselves to bear the burden of restoring the fiscal health of Social Security and Medicare, when there are revenue-side solutions that would do the job — including eliminating or adjusting the payroll wage cap on FICA contributions — so that the wealthy begin paying their fair share into the system.
Q: Conservatives are careful to say that they’re not going to do anything that affects current beneficiaries, as if adults who haven’t yet reached retirement can afford to have their future benefits cut.
A: That’s right. If anything, today’s younger adults will rely on Social Security and Medicare even more than current retirees do. And that’s because of multiple factors like ongoing wealth inequality, flat wages, soaring student debt, the demise of traditional pensions, and other things that prevent younger people from saving enough for their senior years. And by the way, one of the most common conservative proposals, adopting the ‘Chained CPI’ for calculating Social Security COLAs, would definitely reduce today’s retirees’ benefits.
Q: Yes, the conservatives are pretty cagey. They never come right out and say they’re going to “cut” benefits, but that’s exactly what most of their proposals would do.
A: Right. They make their proposals sound like technical or procedural changes. But raising the retirement age to 70 is a benefit cut. Means testing Social Security is a benefit cut. Reducing payments to Medicare providers could ultimately reduce the quality and affordability of care for seniors – which effectively is a benefit cut.
Q: You have a metaphor for what they’re doing. Remind us what it is?
A: The so-called procedural or technical changes Republicans propose are like what a magician does with misdirection. Magicians direct your attention to their left hand — “Nothing going on here!” — while the right hand steals your watch. In other words, “We’re not touching your Social Security and Medicare, we’re just making these little changes over here.” But the only way to achieve their austerity goals (without raising revenue) is by gutting Social Security and Medicare.
Q: So why do we see conservatives trying to undermine Social Security and Medicare (while claiming to want to “save” them) year after year?
A: They keep doing it because they are determined to shrink the size of the government, which means you can’t raise taxes. The only thing left to do is gut programs. This benefits their wealthy and corporate patrons who constantly are striving to pay less in taxes. This approach shifts responsibility further away from the wealthy elites and toward the middle and working classes. Plus there’s an ideological element to it. “Everyone must have skin in the game! No government handouts!” Of course, working people pay into Social Security and Medicare for most of their lives. They’ve earned those benefits, and no one should take those away.