Those of us who are scheduled to retire sometime after 2041 (the date at which CBO now says the Social Security trust fund will be depleted) have been whining an awful lot lately about ensuring that the system will still be there for us.
But what about today's wealthy seniors? How can we make sure they get what's coming to them? Relax-- Kentucky Senator Jim Bunning is on your side. Bunning's successful amendment to the Senate budget resolution (which passed last week) would increase the after-tax Social Security benefits of current retirees by amounts ranging from zero (for roughly the poorest three quarters of all current Social Security recipients) to 14% (for beneficiaries earning over $200,000). The Bunning plan would target more than half of its benefits to the 8.8 percent of Social Security beneficiaries with total income over $100,000-- and would completely exclude the 50 percent of Social Security beneficiaries living on $30,000 a year or less. (These numbers come from a new CTJ analysis showing that the Bunning amendment would offer little or no relief to most low- and middle-income retirees, but would be a bonanza for wealthy Social Security recipients.)
Does this seem like a crazy plan to you? If so, you're not Jim Bunning. The Bunning plan achieves this upside-down increase in Social Security benefits by repealing the second tier of federal income tax on Social Security benefits. The second tier, enacted in 1993 as part of the Clinton administration's historic deficit reduction legislation, basically allows up to 85 percent of Social Security benefits to be taxed like regular income, for a small number of the wealthiest Social Security beneficiaries. (The first tier, which is unaffected by the Bunning amendment and was signed into law by President Reagan, subjects up to 50 percent of Social Security benefits to tax at a lower income threshold, but still applies to relatively few taxpayers.)
Given the bleak long-run fiscal forecast the nation currently faces, you don't need a Teleprompter to see that this plan would increase the Social Security benefits of today's wealthiest retirees while further endangering our ability to pay full benefits for the low- and middle-income retirees of the future for whom these benefits are most crucial. Max Sawicky brings this point home very well. Mortgaging our future to benefit today's leisure class is hardly a surprising move for the GOP leadership-- but this is an especially innovative way of doing it.
Of course, this is not a done deal yet. This provision will still have to find support in the House. But getting through the Senate is usually the hard part for fiscally irresponsible, regressive tax cuts these days. It's alarming that 55 Senators (including five Democrats) would vote for a plan that violates the basic maxim: "When you're in a hole, stop digging."