Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

[jk]

STOP THE PRESSES! [how many years have we been waiting for this headline?]




Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

A Democratic-led policy group is defying party history by proposing changes to Social Security to pave the way for recommendations this week by President Barack Obama’s deficit-cutting commission.

Washington-based Third Way said its plan would raise the retirement age, trim or eliminate Social Security benefits for high-income retirees, limit cost-of-living increases and provide money to help young workers create private retirement accounts.

The proposal, to be released after the presidential panel is due to issue its report tomorrow, is timed to help create a buffer for congressional Democrats to support politically unpopular deficit-trimming measures, said Third Way spokesman Sean Gibbons.

{snip}

The plan by Kessler’s group, a copy of which was provided to Bloomberg News, will propose boosting monthly benefits for the lowest-income retirees while reducing them for higher earners. Cost-of-living increases would be smaller.

Some retirees would have to pay taxes on their full Social Security payments. Currently, individual retirees with $34,000 in outside income and couples with $44,000 must pay taxes on 85 percent of their benefits. The Third Way plan would require individuals earning $50,000 a year and couples receiving $60,000 to pay taxes on 100 percent of the benefit.

Social Security benefits would be reduced on a scale starting at individuals with $150,000 in outside income and couples with $250,000, and eliminated for individuals earning $200,000 and couples with $400,000 in income.

‘Should Not Receive It’

“Those who should not need Social Security at all should not receive it during their high-income years,” the proposal said.

The retirement age, now scheduled to rise to 67 in 2027, would gradually increase to 68 by 2041, to 69 by 2059, and to 70 by 2077. This would reduce total benefits by roughly $1 trillion by 2040, according to the plan....

http://www.bloomberg.com/news/2010-1...tic-group.html

[we_are_toast]

Re: Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

This really isn't so new. Means testing of Social Security has been proposed for decades. It just needed a serious enough crises to be taken seriously.

One thing to keep in mind, this is part of a very large package of ideas to balance the budget. There are many other worthwhile ideas, including revenue enhancements that need to be considered as a package. If they try to just pick the cutting parts without the revenue parts, it won't fly in the Dem party.

[c1ue]

Re: Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

Nice to see that politician's promises are still worth their weight in gold.

From the original Social Security Act of 1935:

http://ssa.gov/history/35actii.html

OLD-AGE BENEFIT PAYMENTS

SEC. 202. (a) Every qualified individual (as defined in section 210) shall be entitled to receive, with respect to the period beginning on the date he attains the age of sixty-five, or on January 1, 1942, whichever is the later, and ending on the date of his death, an old-age benefit (payable as nearly as practicable in equal monthly installments) as follows:
(1) If the total wages (as defined in section 210) determined by the Board to have been paid to him, with respect to employment (as defined in section 210) after December 31, 1936, and before he attained the age of sixty- five, were not more than $3,000, the old-age benefit shall be at a monthly rate of one-half of 1 per centum of such total wages;
(2) If such total wages were more than $3,000, the old-age benefit shall be at a monthly rate equal to the sum of the following:
(A) One-half of 1 per centum of $3,000; plus
(B) One-twelfth of 1 per centum of the amount by which such total wages exceeded $3,000 and did not exceed $45,000; plus
(C) One-twenty-fourth of 1 per centum of the amount by which such total wages exceeded $45,000.
(b) In no case shall the monthly rate computed under subsection (a) exceed $85.
(c) If the Board finds at any time that more or less than the correct amount has theretofore been paid to any individual under this section, then, under regulations made by the Board, proper adjustments shall be made in connection with subsequent payments under this section to the same individual.
(d) Whenever the Board finds that any qualified individual has received wages with respect to regular employment after he attained the age of sixty-five, the old-age benefit payable to such individual shall be reduced, for each calendar month in any part of which such regular employment occurred, by an amount equal to one month's benefit. Such reduction shall be made, under regulations prescribed by the Board, by deductions from one or more payments of old-age benefit to such individual.

PAYMENTS UPON DEATH

SEC. 203. (a) If any individual dies before attaining the age of sixty-five, there shall be paid to his estate an amount equal to 3 1/2 per centum of the total wages determined by the Board to have been paid to him, with respect to employment after December 31, 1936.
(b) If the Board finds that the correct amount of the old-age benefit payable to a qualified individual during his life under section 202 was less than 3 1/2 per centum of the total wages by which such old-age benefit was measurable, then there shall be paid to his estate a sum equal to the amount, if any, by which such 3 1/2 per centum exceeds the amount (whether more or less than the correct amount) paid to him during his life as old-age benefit.
(c) If the Board finds that the total amount paid to a qualified individual under an old-age benefit during his life was less than the correct amount to which he was entitled under section 202, and that the correct amount of such old-age benefit was 3 1/2 per centum or more of the total wages by which such old-age benefit was measurable, then there shall be paid to his estate a sum equal to the amount, if any, by which the correct amount of the old- age benefit exceeds the amount which was so paid to him during his life.

PAYMENTS TO AGED INDIVIDUALS NOT QUALIFIED FOR BENEFITS

SEC. 204. (a) There shall be paid in a lump sum to any individual who, upon attaining the age of sixty-five, is not a qualified individual, an amount equal to 3 1/2 per centum of the total wages determined by the Board to have been paid to him, with respect to employment after December 31, 1936, and before he attained the age of sixty-five.
(b) After any individual becomes entitled to any payment under subsection (a), no other payment shall be made under this title in any manner measured by wages paid to him, except that any part of any payment under subsection (a) which is not paid to him before his death shall be paid to his estate.

...

ASSIGNMENT

SEC. 208. The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

[jk]

Re: Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

as i said, we've been waiting for this headline for years, and it still hasn't been put into effect. it's odd to see how long it takes for what is obviously inevitable to become real.

[DSpencer]

Re: Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

If this happens will people stop insisting that SS is not a redistribution of wealth program?

[Master Shake]

Re: Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

Sounds like "from each according to his abilities, to each according to his needs."

"Means testing" of SS benefits is just a euphemism for confiscation.

[jpetr48]

Re: Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

Am I understanding this correctly?
If your income is 44K or more as a couple , then you get taxed 85% on what you were already taxed before retirement?
Is this double taxation?

[jk]

Re: Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

in reality, of course, social security is a transfer tax, not a savings scheme. nonetheless, part of the transfer payments are taxed as income. [btw,, if you withdraw money from an ira or pension plan, the withdrawal is all taxed as income.]

[charliebrown]

Re: Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

Just how many elderly couples generate 250,000 a year? and even if they do, only their ss income is reduced, and what is that several thousand dollars a month? This whole income testing things seems like window dressing to assuage the tax breaks for the rich crowd. And why is 250K such a magic number for seemingly rich vs. poor? Is this going to be inflation adjusted? So when we have a decade of 10% inflation, 250K has the purchasing power of 100K? I assume the retirement age factor is more important to the 1T in savings. Will the system survive to 2040? Good paying jobs are leaving, being relpaced by jobs at taco bell. Those two wages contribute vastly different amounts into the system. Another round of unemployment puts further stress onto the system. My friends who are in there early 60's are all considering taking the early benefits at 62, because of a lack of confidence in the system. According to usdebtclock.org, payroll taxes collected are heading down.

[bill]

Re: Democratic Policy Group Would Cut Social Security for Top Earners in U.S.

page 43
http://www.c-span.org/pdf/debtCmsn120110.pdf