CBO: GOP Social Security Plan Would Cut Benefits by Thousands, Not Extend Solvency

Yves here. It seems puzzling that the CBO has found that at proposed GOP plan to reduce Social Security benefits by increasing the “full retirement age” from 67 to 69 would succeed in lowering payments, particularly to those who wanted/needed to retire at an earlier age and receive reduced benefits, without actually improving fund solvency. The nomenclature is confusing, since the later you begin taking Social Security, the higher the benefits are, with 70 the latest start date now. I have not had the time to kick the tires and hope to be able to look at analyses. Perhaps the reason for the lack of a solvency improvement is a gradual phase in.

Having said that, it seems that this plan is an existing Republican scheme (I took a brief look at the CBO study and it links to a 2022 description as a source) that has also in some form (not sure if that embodiment or a more general handwave) been picked up by Project 2025. Even though the Democrats have been trying to make Project 2025 a Trump agenda, it is an extreme conservative wish list (with internal contradictions!) that hard core Republicans would try hard to get Trump to adopt. So even though one should indeed worry that Trump is on board, no one has produced the receipts.

On top of that, let us also not forget that both Clinton and Obama fully intended to “reform” as in cut, Social Security, but for different reasons never got there. So those who want to protect and strengthen Social Security must not assume Team Dem is their friend. Both parties need to get the message that they must increase payroll taxes by ending the income cap or otherwise taxing higher income earners more, rather than lowering benefits.

Separately, even though the Social Security Administration is the most important actuarial position in the US, I wonder to what degree its models have been updated to reflect the shortening in US lifespans (which for the moment has stalled out) and the prospects for more of the same given long-term Covid health effects and ever-less-affordable US health care. You would think that the resulting thinning of the aged would somewhat improve Social Security solvency, but I have seen no reports of the kind.

Note that Trump is presenting himself as increasing incomes of Social Security beneficiaries in his ads. I have seen YouTube promos with a clip from one of his rallies in which Trump says he will stop taxing tips and Social Security benefits.  Natch, the roughly 40% who pay income taxes have higher earnings.

By Jessica Corbett, staff writer at Common Dreams. Originally published at Common Dreams

Social Security defenders have long argued that former Republican U.S. President Donald Trump’s return to the Oval Office could spell disaster for seniors, and a nonpartisan government analysis released Wednesday bolsters their warnings.

U.S. House Budget Committee Ranking Member Brendan Boyle (D-Pa.) asked the Congressional Budget Office (CBO) to analyze the impact of raising the full retirement age (FRA) for Social Security from 67 to 69, as various Republican groups have proposed.

“This report shows that raising the retirement age to 69 would slash benefits by an average of $3,500 a year,” Social Security Works executive director Alex Lawson told Common Dreams. “For seniors and people with disabilities, that means not being able to buy groceries, pay a heating bill, or buy birthday presents for their grandkids.”

“This cruel benefit cut would hit those who claim benefits early—largely people who work on their feet, not those who work in offices—the hardest,” Lawson noted. “Even worse, it is only one of the benefit cuts that Republicans are backing. Their goal is to destroy our Social Security system.”

As CBO Director Phillip L. Swagel wrote to Boyle:

All people affected by such an increase in the FRA would receive a smaller amount of Social Security benefits over their lifetime. Workers who chose to delay claiming their retirement benefits by the same number of months as the increase in the FRA would receive the same monthly benefit for a shorter period. Those workers who claimed retirement benefits at the same age as they would have claimed them under current law would receive a smaller benefit for the same number of years.

In a statement responding to the report, Boyle’s office highlighted that “for workers currently in their 30s and 40s who are subject to the full retirement age increase, the average annual benefit cut would be 13%, or around $3,500 a year.”

As the congressman’s office pointed out, the CBO also found that “though increasing the retirement age would reduce spending, it would not create enough savings to change the expected exhaustion date of the Social Security Trust Fund, which is projected to be unable to pay full benefits by the end of fiscal year 2034.”

Boyle and Senate Budget Committee Chair Sheldon Whitehouse (D-R.I.) have introduced the Medicare and Social Security Fair Share Act, which would extend the solvency of both programs by requiring Americans with higher incomes to pay more than they do now.


“Social Security is a sacred promise that after a lifetime of hard work, Americans have earned the right to retire with dignity,” Boyle said Wednesday. “This independent, nonpartisan report shows just how devastating Republican plans to rip away hard-earned Social Security benefits would be for American workers.”

“Instead of saving Social Security by making the ultrarich pay their fair share, the GOP is hellbent on gutting benefits for the middle class,” he warned, specifically calling out the congressional Republican Study Committee and the Heritage Foundation, which is behind Project 2025. “Democrats will never stop fighting to keep the promise of Social Security and defend Americans’ retirement security from Republican attacks.”

The CBO report comes less than six weeks away from the U.S. general election. Democratic Vice President Kamala Harris is facing Trump in the race for the White House.


Before President Joe Biden left the contest and passed the torch to Harris, the National Committee to Preserve Social Security & Medicare, National United Committee to Protect Pensions, and Social Security Works Political Action Committee were backing him over Trump. All three groups have endorsed Harris.

“As president, Biden has been an unwavering protector of Social Security and Medicare,” Social Security Works president Nancy Altman wrote in a July opinion piece for Common Dreams. “Harris will be as fierce a defender, and she will do more. She will expand Social Security and Medicare and ensure that all benefits will continue to be paid in full and on time for the foreseeable future by requiring billionaires to pay their fair share.”

“In stark contrast, Donald Trump and his Republican allies in Congress are a serious threat to our earned benefits and to our families,” she stressed, also warning of the GOP’s positions on medication prices and tax breaks for the rich. “A vote for Democrats is a vote to expand benefits, lower prescription drug prices, and require those billionaires to start paying their fair share.”

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41 comments

  1. Zagonostra

    Can you imagine a roofer or other manually intensive worker having to wait until he/she is 69 to be eligible for SS? Having to wait until 67 to receive full benefits is bad enough. I couldn’t find the recent NC link on an article about China raising their retirement age to 60 for males recently, but I found below. Interesting contrast.

    Discussions over the extension of the statutory retirement age in China have been ongoing for years. On 13 September 2024, China officially approved the draft proposal to gradually raise the statutory retirement age starting from 1 January 2025.

    Currently, the statutory retirement age for male employees is 60. The statutory retirement age for female employees in managerial position is 55 and for those in non-managerial positions is 50. According to the newly published regulation, for male and female employees in managerial positions, the statutory retirement age shall be extended for 1 month of every four-month period. For female employees in non-managerial positions, the statutory retirement age shall be extended for 1 month of every two-month period.

    https://www.dlapiper.com/en/insights/publications/2024/09/china-officially-approves-proposal-to-raise-retirement-age

    Reply
    1. chuck roast

      Thanks for that…imagine being a bricklayer. Paul Krugman, one of our favorite dartboards, used to write columns about this sort of SS class bias.

      Reply
  2. Cervantes

    > You would think that the resulting thinning of the aged would somewhat improve Social Security solvency, but I have seen no reports of the kind.

    The latest SS trustee report estimated the FICA revenue at exhaustion to be 83% combined or 79% for just OASI (page 6) compared to 78/76 in the 2021 report (page 6 again). This is an improvement in going cost vs. ongoing revenue.

    https://www.ssa.gov/OACT/TR/2024/tr2024.pdf
    https://www.ssa.gov/OACT/TR/2021/tr2021.pdf

    No doubt part of this improvement reflects higher yields on the remaining and rapidly deteriorating SS trust fund securities, and the trustee reports do show higher yield assumptions as of 2024 (compare page 116 in each report).

    However, it appears the mortality assumptions have trended toward more longevity, not less, if I’m reading correctly the tables starting in the section on longevity around page 100. Nevertheless, I’m sure higher mortality would still back its way into the actuarial projections just by cutting the number of current annuitants relative to payors ever so slightly.

    > The nomenclature is confusing, since the later you begin taking Social Security, the higher the benefits are, with 70 the latest start date now. I have not had the time to kick the tires and hope to be able to look at analyses. Perhaps the reason for the lack of a solvency improvement is a gradual phase in.

    The deficit is so large, the trust fund is so shrunken, and the depletion is so near that minor improvements in revenue/expense are unlikely to materially change the exhaustion date. If the only benefit reduction is to extend FRA to 69, that’s basically a ~15% benefit cut to new annuitants starting in some suitably future date. Even if it starts as early at 2026, it’s not going to affect enough annuitants relative to the existing group to change the trajectory. As of 2023, there were approximately 58 million annuitants on the rolls. There are slightly more than 41 million US residents age 50-59 that would go on SS in the next 10 years. If we just very roughly estimated that they will only replace existing beneficiaries, that they will have the same benefit levels as the people they replace, that the benefit cut would indeed be 15%, and that we can very roughly model the effect by changing the benefits in 2030 (about halfway to 2034), then total benefit payments in real terms would only drop by 41/58*.15=.106, or 10.6%. If we further assume that the 2034 estimate of 79% for revenue/benefit coverage already applies in 2030, then that raises the coverage to about 90%. If 2030-2034 would deplete the trust fund by covering a roughly 20% deficit for 4 years, then halving the deficit would add maybe 4 years. This seems like the best case scenario to me–if the benefit cut start dates are delayed by any amount, the more rigorous actuarial estimate pushes the decline in benefit payments out a bit, and the number of annuitants is actually growing through 2030 or so instead of just replacing older with younger, you could see why it would not help the exhaustion date.

    https://www.ssa.gov/oact/STATS/OASDIbenies.html
    https://www.statista.com/statistics/241488/population-of-the-us-by-sex-and-age/

    Also, I just don’t believe in talking about it in terms of changing the retirement date. Everything I have seen continues to allow people to start SS between 62 and 70. If they just change FRA, then it’s tweaking the formula for benefits for each age from 62 to 70. That’s just a benefit reduction.

    Reply
    1. Mikel

      Any more ladders for the geezers to pull up? They better hurry…running out of time!
      They’ll be gone.

      What is needed is to make sure future generations prop them right back up. (wishful thinking, but trying to end on a positive note).

      And once again, it’s a plan that hurts those haven’t saved as much money in other places. Of course PMC’ers and technocrats love it.

      Reply
    2. Mikel

      I have a better idea. Take money that goes to the Pentagon and put it in SS.
      As it is, hasn’t money been siphoned out of the fund for other purposes?

      Here’s the simple formula: Move values in one column of the ledger to the other.

      Reply
      1. Tim N

        The question you should be asking is this: why does the Pentagon not need a “trust fund” to pay for its spending? Why does SS , a federal government program, need a trust fund? The money is guaranteed, precisely because it’s a government program.

        Reply
    3. Milton

      When does the defense trust fund run dry? Oh that’s right, gov’t being like a household budget doesn’t apply in that case.

      Reply
    4. Greg Taylor

      SS “solvency” can easily be resolved by changing the arbitrary formula for calculating “interest” so that the “trust funds” grow faster than the present formula allows. It’s been done at least twice in the past.

      Reply
    1. Wukchumni

      There I was, one hand clinging onto a higher rung. and then alternating upwards and back and forth with fancy footwork, enabling the powers that be to stow away that ladder, for yours truly had tapped into my contribution of $XXX,XXX.xx worth of high pressure investment entitlement, and hopefully grandfathering me into the get the money! scheme, too!

      The only thing that fluctuates up and down is the price of gasoline, everything else has been on a tear inflation-wise, with the exception of TV sets and marijuana, both thankfully offset by an attendant rise in the cost of munchies.

      Otherwise, everything I buy has gone up 30-40% in the past couple years while awaiting my chance at the stash before hitting 62… with insurance coverage skyrocketing, but food not doing so badly either.

      You know it’s bad when they have lay-a-way plans at supermarkets now, so you can pay for Tuesday’s hamburger today.

      All the other geezers I know have waited until they were 65-67 to get the money, but then again their expectations weren’t that it would get eaten up vis a vis sinkflation.

      Shift happens.

      Reply
      1. Randall Flagg

        >You know it’s bad when they have lay-a-way plans at supermarkets now, so you can pay for Tuesday’s hamburger today.

        I’m so old that I remember not only lay away plans at most of the bigger department stores but your local bank would have Christmas clubs, so you could drop a little money in each week to save for the holiday gifts, or whatever. Of course that was when you would go to the bank to cash your paycheck, either depositing it into your account or taking the whole thing home and apportioning it out in various envelopes or jars for each expense. And you could get a toaster opening a new account.

        Maybe the cap on SS earnings should be raised to much higher levels and pronto.

        https://www.investopedia.com/2021-social-security-tax-limit-5116834

        Reply
          1. Nikkikat

            My toaster just went. It was a wedding present 42 years ago. Bought a new one. I figure most appliances large and small last about 5 years now.

            Reply
    1. Zagonostra

      My home owner insurance company, State Farm, sent me a letter stating that if I don’t get a new roof they would stop insuring my house effective Aug ’25. At first I thought f them, my house is paid for and my roof, though covered here and there with moss, doesn’t leak…but I thought, money in the bank won’t be worth as much tomorrow, so I might as well get a new roof.

      A crew of 5 Latin American (I’m guessing, but none spoke English, 1 was a women) came at 7:00 am 12 hours later I had a new roof…I was blown away how efficient and hard working they were, they took 1 lunch break and were as professional as could be. The owner of the company they work for apologized none of his crew could speak English, I told him, hell, the way they conducted themselves and the quality of the work they did, I couldn’t care less. I just hope they are able to collect social security when they get old and their youthful stregth ebbs and not at 69.

      Reply
      1. NYMutza

        A new roof in 12 hours? I had my roof replaced a few weeks ago. A demolition crew arrived a 7:30am and were done removing the old roof by 5:30pm. This was a Friday. Monday morning a separate group arrived with a conveyor belt to bring the roofing materials to the bare roof. That took 2 hours. Another group arrived to replace the gutters. Then the roofers began installing the new roof. By mid-day Tuesday they were done and I had a nice new roof & gutters. The entire crew spoke Spanish and a least some spoke English. The music they played while working was very enjoyable. Hard working people work hard. The government shouldn’t nickle and dime them when it comes to benefits they earned. We should all feel ashamed.

        Reply
        1. Nikkikat

          The social security, disability and taxes deducted from their checks every week
          Will never be paid to them. I have seen the same thing. Landscaping, roofing,car washes and various kinds of construction, withdraw these funds from these good hardworking people and 5hey can never collect. The pride they take in their work is also commendable. The exploitation of these decent hard working people continues.

          Reply
  3. Maitake2Hearts

    JFK/LBJ, JC, BC(HC)/AG, BO/JB, JB/KH and once and future Blue Queen KH(HC)/and tiny tim, none of them ever that I recall lifted a pinkie finger towards lowering retirement age, rescinding the AGreenspan/RR punishment of the working class SS tax increase or stopping the penalty of paying back benefits for unable to afford staying out of work force. What is the annointed one’s workaround for proposing actual policy such as maybe rolling back the attacks on agency funding and defending disability benefits?

    Reply
  4. David in Friday Harbor

    The Social Security earnings cap is ridiculous — even as a high-level lumpen-PMC civil servant I would regularly hit the cap by August during my final decade of employment.

    Our system of Inverted Totalitarianism is biased in favor of the rich and creating a few more billionaire donors — a mere 800 individuals among 135M full-time workers. The more wealth that is sequestered by Our Billionaire Overlords and their PMC toadies is less wealth taxed for the Social Security Trust Fund. They will wail that it’s not “fair” that they will never see a “benefit” from these taxes. Funny, I get no “benefit” from the Carried Interest Rule or from arming Israel and “Ukraine,” but I still have to pay Income Tax — and got whacked hard when I sold my house with “caps” on State and Local Tax deductions and on like-kind exchanges of primary residence.

    Raising the income “cap” would be the simplest “fix” in the world and tells us everything that we need to know about how Inverted Totalitarianism has subverted democratic accountability in America.

    Reply
    1. Thomas Schmidt

      Ok, but there’s a requirement so it isn’t more transfer of wealth from younger working people to older retired peopleonly. We have SS and Medicare recorded correctly going back to 1990. If someone earned a dollar it was taxed for Medicare even if capped forSS.

      Go back to 1990 and retroactively tax ALL the income that avoided SS tax and I’ll consider it fair.

      Reply
  5. NYMutza

    Raising the Social Security income cap is not a good approach as it invites complaints of unfairness. The problem with Social Security funding is many decades in the making – the stagnant wages since the 1970s. A 50% boost in wages paid would raise hundreds of billions for SS each and every year.

    Reply
      1. scott s.

        It’s unfair because OADSI is an insurance annuity. I can go online and get a quote for a single premium annuity. It doesn’t ask me what my income is to determine the quote.

        We already have SSI as a welfare program.

        Reply
        1. David in Friday Harbor

          Social Security is not a fixed-price insurance annuity delivering a fixed benefit. It was never any such thing. It’s just a tax.

          Because Social Security (OADSI) is a tax-funded Social Insurance program funded by a tax, the Federal Insurance Contributions Act (FICA), is calculated as a fixed percentage of income. As a Social Insurance program, Social Security eventually added Disability benefits (SSI) and Aid to Families with Dependent Children (AFDC) to the income floor assuring that people over the age of 67 don’t fall into penury when their bodies start giving out.

          As Yves’ link below documents, this concept of Social Insurance was fundamental to Theodore Roosevelt’s “Square Deal” program. There is no justification for the cap other than the naked power of the wealthy.

          Reply
      2. NYMutza

        The program was envisioned as an insurance policy, with the premiums being the payroll deductions. The higher the deductions the greater the benefits. Morphing into some kind of welfare program based on need was never in the original plan. So it can be seen as unfair for someone paying payroll taxes on $400K while receiving benefits no greater than someone paying payroll taxes on $150K.

        Reply
        1. Yves Smith Post author

          The initial design objective of Social Security was to be self supporting, and not to provide for “fairness” on an individual level. See: https://www.ssa.gov/history/genrev.html

          It is impossible under any social insurance system to provide ideal security for every individual. The practical objective is to pay benefits that provide a minimum degree of social security—as a basis upon which the worker, through his own efforts, will have a better chance to provide adequately for his individual security.

          https://www.ssa.gov/history/briefhistory3.html

          Reply
          1. NYMutza

            That being said, higher wages will do more to improve the solvency of SS than will raising the amount subject to withholding. It is difficult to maintain a socialist program within a capitalist system.

            Reply
          2. atlantafox

            Social Security is primarily known for its retirement benefits, but also includes Disability Benefits (SSDI) providing benefits to workers who become disabled before reaching retirement age; Survivors Benefits that provides benefits to family members of retired, disabled, or deceased workers.

            Social Security also administers Supplemental Security Income (SSI) that provides financial support to low-income individuals who are aged, blind, or disabled.

            Factor in all these elements and whose to say at what income payroll taxes should be capped?

            Reply
      3. Thomas Schmidt

        Because it taxes the part of the population that is least wealthy (younger working adults) to pay money to the part of the population that is most wealthy (people over 65)? Just going out on a limb there.

        One thing that I hope does get preserved about SS is how it guarantees a minimum benefit for lower-income people since being elderly and poor is hard to get out of.

        Reply
  6. Guy Liston

    My wife retired from the Chinese postal system at the age of 50, her brother, a janitor, retired at 55. I had to wait until 66.5 until I get what I tell my Chinese friends a retirement that could pay me enough to eat or rent a home, but not both, Mike Liston

    Reply
  7. Reply

    Federal Civil Service Retirement System is the bureaucrat version of Social Security.
    They should be part of any SS analysis and proposed solutions.
    Also look at any other Fed retirement programs to see the terms.

    Reply

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