With Republicans taking control of the presidency, Congress, and the Senate, the future of Social Security is even more uncertain than before. This political party has a long history of opposing public assistance programs, including Social Security, which provides financial stability for millions of retirees, disabled individuals, and survivors.
The Republican Study Committee (RSC) has presented a budget with $1.5 trillion in cuts to Social Security, indicating that the current situation will remain unchanged. The likelihood of these revisions passing both chambers and becoming law has significantly increased. Some of the planned changes include:
Raising the Retirement Age
Over the years, this has been one of the most persistent Republican proposals. Since the Social Security collapse in the 1980s, the full retirement age has gradually increased to 67 years for those born in 1960 or later. The idea suggests raising the age limit to 69 to reduce financial strain on the Social Security Trust Fund.
The U.S. Senate Committee on the Budget (COB) disproved the theory that raising the retirement age would affect Social Security’s projected insolvency date. The COB also found that this policy change would disproportionately affect low-income retirees who must work until full retirement age or beyond.
The Republican party argues that raising the retirement age will extend the program’s viability by reducing the number of years benefits are paid out. However, given that the shortfall will occur regardless, a better alternative should take precedence.
Modifying the Cost-of-Living Adjustments (COLA)
This is a bipartisan plan, but as one might expect, both sides of the aisle disagree on this topic. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) computes the COLA, which helps Social Security recipients keep up with inflation.
This index weights categories and provides a percentage gain for all advantages. Republicans propose changing the index to the Chained Consumer Price Index (C-CPI), which normally grows slower than the CPI-W.
They contend that the C-CPI more accurately represents changes in consumer behavior and inflation. Additionally, slower growth would result in a lower COLA and consequently fewer benefits being delivered.
This might financially devastate many individuals who are already struggling to make ends meet as it is. Democrats and senior advocates propose changing the index to the Consumer Price Index for the Elderly (CPI-E), which measures spending among individuals aged 62 and over and has outpaced the present CPI-W. This would increase beneficiaries’ disposable income while hastening the program’s collapse.
Means Testing for Social Security Benefits
The proposal of means testing for Social Security payments involves adjusting payouts based on income and assets, which could potentially result in a decrease or elimination of benefits for high-income retirees. Currently, payments are based on a person’s earnings history and contributions made during their working years, regardless of retirement savings. Proponents claim that means testing might shift funding to individuals in more financial need, extending the program’s stability. Critics argue that it compromises Social Security’s universal nature and may discourage saving for retirement.